UNAUDITED INTERIM REPORT AND ACCOUNTS TITLE (40 50 CHARACTERS)

Transcription

1 UNAUDITED INTERIM REPORT AND ACCOUNTS TITLE (40 50 CHARACTERS) BLACKROCK STRATEGIC FUNDS (BSF) SUBTITLE (40-50 CHARACTERS) R.C.S. Luxembourg: B NOVEMBER 2014

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3 Contents BSF Chairman s Letter to Shareholders 2 BSF Investment Advisers Report 4 Board of Directors 9 Management and Administration 9 Statement of Net Assets 10 Three Year Summary of Net Asset s 14 Statement of Operations and Changes in Net Assets 18 Statement of Changes in Shares Outstanding 22 Portfolio of Investments BlackRock Americas Diversified Equity Absolute Return Fund 26 BlackRock Asia Extension Fund 47 BlackRock Emerging s Absolute Return Fund 52 BlackRock Emerging s Allocation Fund 55 BlackRock Emerging s Flexi Dynamic Bond fund 66 BlackRock Euro Dynamic Diversified Growth Fund 69 BlackRock European Absolute Return Fund 73 BlackRock European Constrained Credit Strategies Fund 77 BlackRock European Credit Strategies Fund 89 BlackRock European Diversified Equity Absolute Return Fund 104 BlackRock European Opportunities Extension Fund 117 BlackRock Fixed Income Strategies Fund 120 BlackRock Fund of ishares Conservative 130 BlackRock Fund of ishares Dynamic 131 BlackRock Fund of ishares Growth 132 BlackRock Fund of ishares Moderate 133 BlackRock Global Absolute Return Bond Fund 134 BlackRock Global Long/Short Equity Fund 176 BlackRock Latin American Opportunities Fund 190 BlackRock Multi-Strategy Absolute Return Fund 192 Notes to the Financial Statements 224 General Information 234 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 to Shareholders November 2014 Dear Shareholder I am writing to update you on the activities of BlackRock Strategic Funds (the Company ), a Luxembourg UCITS Fund range providing clients with access to BlackRock investment products which seek to take full advantage of the expanded investment powers incorporated in the UCITS directive. This report covers the Company s six month period from 1 June 2014 to 30 November The half year to 30 November 2014 saw increased volatility in equity markets as fears mounted on the outlook for global economic growth. Data from the Eurozone in particular weighed on sentiment. However, after a difficult October 2014, stock markets had recovered somewhat towards the end of the period. That said there was a significant disparity between different markets: the US market, for example, raced ahead, while European markets remained lacklustre. Also notable was a marked preference for lower risk assets. Yields on government bonds fell to new lows, with the yield on 10 year German bunds dipping to 0.7% by the end of the period as investors anticipated a fresh round of monetary easing. However, monetary policy started to diverge, as Japan and the Eurozone remained firmly in loosening mode, while the US and UK mulled interest rate rises. As it was, although the quantitative easing programme in the US came to an end in October 2014 as planned, interest rate rises continued to be deferred into 2015 and beyond. Investors retreated from higher risk assets, particularly in October Mid and smaller companies were sold off across the globe after a long run of outperformance. Equally, emerging markets gave up some of their recent gains. Surprisingly, of the major developing economies it was not Russia that hurt emerging market investors hardest, but Brazil. The disruption surrounding the election, plus the re-election of the market s less favoured candidate, Dilma Rousseff, hurt investor returns. The UK was another notable weak spot, after the stronger currency hurt corporate earnings for a number of companies. Following a period of strong performance, many asset classes already looked fairly valued at the start of the period. The recent volatility has exacerbated that in some cases, and diminished it in others. Opportunities remain, but both bond and equity markets demand selectivity in the current market. The performance of the Funds is covered in more detail in the separate Investment Advisers Report, which also sets out some views regarding the investment outlook. Overall, the assets under management in the Company range have risen around 18% from 7,598m to 8,935m. Although the BlackRock Fixed Income Strategies Fund saw the strongest growth over the period, rising 182% from 626m to 1,761m, a number of the absolute return strategies also attracted strong flows. The BlackRock Emerging s Absolute Return Fund grew by 58% over the period, to 66m, while assets in the BlackRock European Diversified Equity Absolute Return Fund rose 34% to 317m. The BlackRock Global Absolute Return Bond Fund rose 57% to 468m. The BlackRock European Opportunities Extension Fund also saw strong growth in spite of the relative weakness of European markets, rising 24% to 636m. The BlackRock Latin American Opportunities Fund was hit by the relative weakness of the regional stock markets, with assets declining by 12%. BlackRock is fully committed to remaining at the forefront of the European mutual funds industry by bringing innovative investment products to our clients and is actively working on adding other funds to the range as our product development process brings forward appropriate investment opportunities for clients. With this in mind, we took the decision to launch the BlackRock Global Long/Short Equity Fund and BlackRock Multi-Strategy Absolute Return Fund in June of this year. The BlackRock Global Long/Short Equity Fund aims to achieve a positive absolute return regardless of market conditions, by taking synthetic long and synthetic short investment exposures. This should be well-adapted to a market environment in which there is an increasing dispersion between individual stock performances. The BlackRock Multi-Strategy Absolute Return Fund will invest across a range of asset classes, including but not limited to: shares, fixed income securities, money market instruments, funds, deposits and cash. Should you have any questions on any of this Letter, please contact us via our website: The information stated in this report is historical and not necessarily indicative of future performance. 2 BlackRock Strategic Funds (BSF)

5 BSF Chairman s Letter to Shareholders November 2014 continued Significant Events In a letter to shareholders dated 27 June 2014, the Board of Directors of the Company advised shareholders of its decision to liquidate the assets held in the underlying investment portfolio for each of the following Funds, with the intention of distributing redemption proceeds to shareholders on 1 September 2014: BlackRock Fund of ishares Conservative BlackRock Fund of ishares Dynamic BlackRock Fund of ishares Growth BlackRock Fund of ishares Moderate In a letter to shareholders dated 21 July 2014, in order to facilitate an orderly exit from the Funds for all shareholders, the Board of Directors of the Company decided to postpone the effective date of the closure until 31 December 2014 (the New Effective Date ). The Funds were reopened to subscriptions from 8 July Yours faithfully, Nicholas C.D. Hall Chairman December 2014 The information stated in this report is historical and not necessarily indicative of future performance. Unaudited Interim Report and Accounts 3

6 BSF Investment Advisers Report Performance Overview 1 June November 2014 Disclosed in the table below are the performance returns for the primary non-distributing share class for each Fund, which has been selected as a representative share class. Calculation methodology is based on industry standards. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. The Fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The performance figures do not consider charges and fees that may be levied at the time of subscription or redemption of shares. Levels and bases of taxation may change from time to time. Subscriptions may be made only on the basis of the current Prospectus, of which the most recent annual report and audited accounts and interim report and unaudited accounts form an integral part, and Key Investor Information Document (the KIID ). Copies are available from Investor Services, the Transfer Agent, the Manager or any of the Representatives or Distributors. BlackRock Strategic Funds is only available for investment by non-us citizens who are not residents of the US. It is not offered for sale or sold in the US, its territories or possessions. Performance for the Period from 1 June 2014 to 30 November 2014 Calendar Year Performance 6 month Launch Date BlackRock Americas Diversified Equity Absolute Return Fund 'A' Non Dist () 2.20% (0.98)% 10.27% 17 February 2012 LIBOR 3 Month Index () 0.12% 0.29% 0.41% BlackRock Asia Extension Fund 'A' Non Dist () 7.38% 6.71% 11.00% 10 February 2012 MSCI All Country Asia ex Japan () 3.09% 3.07% 7.98% BlackRock Emerging s Absolute Return Fund 'D' Non Dist () (4.68)% 4.84% 1.81% 15 November 2012 LIBOR 3 Month Index () 0.12% 0.29% 0.04% BlackRock Emerging s Allocation Fund 'A' Non Dist () 3.65% (0.94)% 15 November % MSCI Emerging s Index / 40% JPMorgan Emerging s Bond Index Plus () (0.38)% (0.02)% BlackRock Emerging s Flexi Dynamic Bond Fund 'A' Non Dist () (0.21)% (0.34)% 12 June % JPMorgan EMBI Global Diversified / 50% JPMorgan Government Bond Index Emerging s Global Diversified Index () (1.49)% (1.99)% BlackRock Euro Dynamic Diversified Growth Fund 'A' Non Dist () 2.52% 6.40% 5.83% (2.19)% 28 January 2011 Euro Overnight Index Average () 0.01% 0.09% 0.23% 0.82% BlackRock European Absolute Return Fund 'A' Non Dist () 0.47% 3.66% 4.98% 6.11% 27 February Month Euro LIBOR Rate () 0.06% 0.15% 0.51% 1.36% The information stated in this report is historical and not necessarily indicative of future performance. 4 BlackRock Strategic Funds (BSF)

7 BSF Investment Advisers Report Performance Overview 1 June November 2014 continued Performance for the Period from 1 June 2014 to 30 November 2014 Calendar Year Performance 6 month Launch Date BlackRock European Constrained Credit Strategies Fund 'I' Non Dist () (1.26)% 4.75% 6.14% 0.88% 22 September Month Euro LIBOR Rate () 0.06% 0.15% 0.51% 0.40% BlackRock European Credit Strategies Fund 'H' Non Dist () (1.59)% 5.22% 6.96% 2.04% 16 February Month Euro LIBOR Rate () 0.06% 0.15% 0.51% 1.23% BlackRock European Diversified Equity Absolute Return Fund 'A' Non Dist () 8.64% 18.00% (0.53)% (4.55)% 6 August Month Euro LIBOR Rate () 0.06% 0.15% 0.51% 1.36% BlackRock European Opportunities Extension Fund 'A' Non Dist () 6.83% 44.94% 22.92% (8.79)% 31 August 2007 S&P Europe BMI Index (Developed s only) () b1 1.50% 22.32% 19.09% (8.59)% BlackRock Fixed Income Strategies Fund 'A' Non Dist () 0.65% 3.80% 7.64% (1.30)% 30 September 2009 Euro Overnight Index Average () 0.01% 0.09% 0.23% 0.86% BlackRock Fund of ishares - Conservative 'K' Non Dist () 3.56% 0.27% 9.05% (0.76)% 17 September 2010 BlackRock Fund of ishares Conservative Customised Benchmark () 4.79% 1.78% 10.43% 0.89% BlackRock Fund of ishares - Dynamic 'K' Non Dist () 5.30% 12.37% 10.13% (9.92)% 17 September 2010 BlackRock Fund of ishares Dynamic Customised Benchmark () 9.64% 12.96% 12.29% (7.56)% BlackRock Fund of ishares - Growth 'K' Non Dist () 4.73% 8.18% 10.29% (6.75)% 17 September 2010 BlackRock Fund of ishares Growth Customised Benchmark () 8.17% 8.89% 12.18% (4.72)% BlackRock Fund of ishares - Moderate 'K' Non Dist () 4.24% 3.82% 10.19% (2.97)% 17 September 2010 BlackRock Fund of ishares Moderate Customised Benchmark () 6.51% 4.66% 11.84% (1.33)% BlackRock Global Absolute Return Bond Fund 'A' Non Dist () (0.90)% 1.51% 2.20% 25 May month Euribor Index () 0.13% 0.20% 0.33% BlackRock Global Long/Short Equity Fund 'A' Non Dist () 3.98% 2 June 2014 BofA Merrill Lynch 3 Month US Treasury Bill () 0.02% BlackRock Latin American Opportunities Fund 'A' Non Dist () (8.08)% (13.15)% 20.03% (28.12)% 14 November 2007 MSCI Emerging Latin America 10/40 (net) () (6.21)% (13.36)% 9.58% (18.57)% BlackRock Multi-Strategy Absolute Return Fund 'A' Non Dist () (0.83)% 25 June month Libor Index () 0.04% b1 Previously known as Citigroup BMI Europe Index. Fund performance returns are based on dealing prices with net dividends (after deduction of withholding tax) reinvested and are shown net of fees. Index Sources: Indices Financial Times, MSCI, Citigroup, DataStream, MorningStar; Funds BlackRock Investment Management (UK) Limited. The information stated in this report is historical and not necessarily indicative of future performance. Unaudited Interim Report and Accounts 5

8 BSF Investment Advisers Report Performance Overview 1 June November 2014 continued Review It was a mixed picture for global equity markets over the six month period, with the FTSE All-Country World Index up by 1.91%. This masked considerable variation in the underlying markets. For example, the US markets saw a significant rise the MSCI North America was up 7.92% over the period, while European and Emerging markets struggled. In general, markets were swayed by positive or negative economic data. As data from Europe and Japan weakened, investors targeted the proven growth available from areas such as the US. There were areas of notable weakness. Of these, Latin America stood out, with the MSCI Emerging Latin America Index dropping 6.21% over the period. The main detractor was Brazil, where volatility around the election and the re-election of the markets less-favoured candidate Dilma Rouseff, disrupted equity markets. The Russian market was also weak, as the oil price slid from over 100 a barrel at its peak mid year to its level at the period end date of 70. The ruble also saw a collapse from October 2014 to the end of the period. In this more febrile climate, investors sought out safe havens. US equities performed strongly, as the world s largest economy continued to show strong growth. The Gross Domestic Product ( GDP ) data was revised higher in November 2014, with the Commerce Department estimating 2014 GDP growth at an annual pace of 3.9%, compared to previous estimates of 3.5%. Spending, payroll and services sector data also continue to support an optimistic view of the economy. In Europe, markets were buffeted by the will they, won t they? on quantitative easing. The MSCI Europe Index rose 1.58% over the period. The German Dax Index was largely flat over the period, while the weaker economies of France and Italy saw their stock markets decline. The relatively rare pockets of strength came from markets such as Ireland. The UK market (represented by the FTSE All-Share) was flat over the period. Japanese equities were among the strongest over the period, but only for those investors who were hedged. For the remainder, the strong gains seen in the stock market were largely wiped out by the weakness of the Yen. The MSCI Japan Index was up 2%. The market was supported by the prospect of a snap election, designed to give Prime Minister Shinzo Abe a platform for abandoning a second planned rise in consumption tax. The impact of the first consumption tax rise had a more negative impact on GDP than had been expected. GDP dropped 7.1% in the third quarter of 2014 and a further 1.9% in the fourth quarter. In the wider Asian economy, many markets were dominated by the prospects for China. The stock market had a strong six months, with the MSCI Emerging China Index up 10.8%. The rally accelerated on news of the central bank s interest rate cut in November 2014, the first in more than two years. The MSCI All Country Asia ex Japan Index was up 3.1% in dollar terms. India continued to dance to its own tune, gaining 12.38% as the reforms of Narenda Modi and his party began to have a clear effect on economic growth. In fixed income, there was surprise strength in developed market government bonds as investors sought out safe havens in the face of weakening economic data from Europe and China. This continued to prompt nerves over the strength of the global economic recovery. The prospect of higher rates in the US and UK appeared to be deferred until the second half of 2015, which also supported government bonds. Corporate bonds, notably the higher quality end, also performed well over the period. Fund Performance Equity Fund Performance The performance of equity funds in the BlackRock Strategic Funds was mixed, reflecting the more difficult market conditions. For the period under review, the BlackRock Latin American Opportunities Fund declined by 8.08%, underperforming the MSCI Emerging Latin America Index, which was down by 6.21%. Stock selection in Brazil detracted from returns. In particular, holdings in Mills, Even and Copasa were hit particularly hard as the Brazilian market declined following the re-election of Dilma Rouseff. Within our absolute return strategies, the BlackRock European Diversified Equity Absolute Return Fund rose by 8.64% and the BlackRock European Absolute Return Fund rose by 0.47%. Both Funds have generated positive annualised returns since their inception, 27.53% and 24.55% since 6 August 2010 and 27 February 2009 respectively, thus continuing to match their long-term objectives of providing positive performance within a low-volatility and risk-aware strategy. Both of these Funds are based on modeldriven investment insights. The BlackRock Americas Diversified Equity Absolute Return Fund gained 2.20%, outperforming the LIBOR 3 Month Index (), which was up by 0.12%. One of our more recent additions to the range, the BlackRock Emerging s Absolute Return Fund, dropped 4.68%, underperforming the LIBOR 3 Month Index (), which was up by 0.12%. The Fund suffered from its short position in Brazil up to the election, and from its long position in Kia Motors Corp and Hyundai Mobis Co Ltd, both of which sold off aggressively when parent company, Hyundai Motor Co, overpaid on a real estate transaction. The BlackRock European Opportunities Extension Fund returned 6.83% over the period, having capitalised on the volatility in The information stated in this report is historical and not necessarily indicative of future performance. 6 BlackRock Strategic Funds (BSF)

9 BSF Investment Advisers Report Performance Overview 1 June November 2014 continued European markets. It outperformed its benchmark, the S&P Europe BMI Index (Developed s Only), which was up by 1.50%. The BlackRock Asia Extension Fund also performed well, rising 7.38% outperforming its benchmark, the MSCI All Country Asia ex Japan Index, which was up by 3.09%. The new BlackRock Global Long/Short Equity Fund has delivered a positive return since its inception on 2 June 2014, rising 3.98%. This over-performed its benchmark the performance from BofA Merrill Lynch 3 Month US Treasury Bill. Bond Fund Performance Fixed income markets were generally more challenging over the period. Investors shrugged off the prospect of higher rates and instead focused on the relative safety offered by government bonds. Higher risk parts of the bond market suffered as a result. The BlackRock Emerging s Flexi Dynamic Bond Fund dipped to 0.21% over the period, but this was ahead of its benchmark, which fell 1.49%. The BlackRock European Credit Strategies Fund dipped 1.59%, compared to a rise of 0.06% for the benchmark, the 3 Month Euro Libor Rate. The BlackRock European Constrained Credit Strategies Fund fared a little better, falling 1.26%. The more flexible BlackRock Fixed Income Strategies Fund was among the best fixed income performers over the period, rising 0.65% over the period, ahead of its benchmark, the Euro Overnight Index Average, which rose by 0.01%. The Fund s ability to allocate across the whole investment universe and an ability to go net short duration allowed it to take advantage of relative value opportunities and avoid the weaker parts of the market. The BlackRock Global Absolute Return Bond Fund dipped 0.90%, behind its benchmark, the 3 Month Euribor Index, which was up by 0.13%. Mixed Fund Performance The BlackRock Euro Dynamic Diversified Growth Fund produced an absolute return of 2.52% over the period, outperforming its benchmark, the Euro Overnight Index Average, which was up by 0.01%. The BlackRock Emerging s Allocation Fund, launched in November last year, returned 3.65% over the period, outperforming the 60% MSCI Emerging s Index / 40% JPMorgan Emerging s Bond Index Plus, which dropped by 0.38% over the same period. The fund has delivered 6.97% since inception. The BlackRock Multi-Strategy Absolute Return Fund was down 0.83% since its inception on 25 June This was behind of its benchmark, which was up 0.4% over the same period. Fund of Funds Performance The BlackRock Funds of ishares range, which was launched in September 2010, offers investors four diversified, multi-asset class funds for different risk appetites: Conservative, Moderate, Growth and Dynamic. The Funds 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. All four Funds achieved levels of risk appropriate to their respective profiles. The best-performing Fund in this range was the BlackRock Fund of ishares Dynamic, which delivered an absolute return of 5.30%, which was followed by the BlackRock Fund of ishares Growth +4.73%, the BlackRock Fund of ishares Moderate +4.24% and the BlackRock Fund of ishares Conservative +3.56%. Outlook 2014 has been characterised by a fear that global economic growth may not be as strong as expected. The relative strength of the US has not been enough to quell concerns over the outlook for China and the Eurozone. We believe these fears may have been overplayed and they have opened up opportunities in certain areas notably Europe and Japan. In 2015, we believe recovery in the US and to a lesser extent the UK, will continue and with that will come tighter monetary conditions. The question of when is still hotly debated. There are increasingly compelling signs of wage growth and consumer spending will be supported by the weak oil price. This suggests that the Federal Reserve may start tightening by mid However, we believe that rate rises, when they happen, will be slow and moderate. Nevertheless, the dollar should continue to strengthen. There are risks to this scenario weaker global demand may exert a drag on growth, and a strong dollar could also hold back exports. That said, the US is a relatively closed economy and is therefore unlikely to be significantly derailed by the global economic weakness. There are likely to be political tensions, as the Republican-led senate pushes for change. Equally, there are still vulnerabilities in the US economy; growth may be motoring, but debt remains high. The UK is likely to be the second major economy to raise rates, though is more exposed to continued weakness in the Eurozone. There remains a chance that UK policymakers may continue to defer a rise. The Bank of England is certainly likely to wait until the disruption created by the General Election in May is over. The information stated in this report is historical and not necessarily indicative of future performance. Unaudited Interim Report and Accounts 7

10 BSF Investment Advisers Report Performance Overview 1 June November 2014 continued The monetary policy trajectory followed by the US and UK is likely to be in marked contrast to that adopted in Japan and Europe. Eurozone growth limps along and even the strongest members of the union (notably Germany) are failing to establish a sustained, reliable recovery. France increasingly looks like the lame duck, with urgent structural reform a necessity. In Japan, all eyes will be on the election result and whether Prime Minister Shinzo Abe will be able to drive through his consumer stimulus package. None of this is necessarily bad for equity markets. Certainly they are more expensive than they were, but they hold more selective value than bond markets, particularly in Japan and the Eurozone. Divergent monetary policy and its impact on currency markets is likely to be a key theme for the year. As it stands, a strong dollar would be good for Japan, Europe and India, but would hit commodities and emerging markets. In fixed income, we prefer credit over government bonds, despite the experience of The weak oil price threatens to destabilise oil producing countries and its consequences on the global economy in aggregate are difficult to quantify. In the meantime, asset class valuations do not provide much of a cushion. It is a time to exercise caution and discernment. The following triggers would prompt a shift to a more defensive stance across the BSF portfolios: Heightened geopolitical tensions A further fall or sustained volatility in oil prices A sustained slowdown in global economy growth Policy errors by central banks Significantly higher valuations December 2014 The information stated in this report is historical and not necessarily indicative of future performance. 8 BlackRock Strategic Funds (BSF)

11 Board of Directors 1 Nicholas C.D. Hall (Chairman) Frank P. Le Feuvre Alexander C. Hoctor-Duncan Francine Keiser Geoffrey D. Radcliffe Bruno Rovelli 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 Advisers BlackRock Asset Management North Asia Limited 16/F Cheung Kong Center 2 Queen s Road Central Hong Kong BlackRock Investment Management (Australia) Limited Level 26, 101 Collins Street Melbourne 3000 Australia Management and Administration continued BlackRock Japan Co., Ltd Marunouchi Chiyoda-ku Tokyo Japan Principal Distributor BlackRock (Channel Islands) Limited One Waverley Place Union Street St. Helier Jersey JE1 0BR Channel Islands Custodian Bank and Administrative Agent 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 Réviseur d Entreprises Agréé 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 234. Registered Office 49, avenue J.F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Enquiries In the absence of other arrangements, enquiries regarding the Company should be addressed as follows: 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: investor.services@blackrock.com Unaudited Interim Report and Accounts 9

12 Statement of Net Assets as at 30 November 2014 BlackRock Strategic Funds Combined BlackRock Americas Diversified Equity Absolute Return Fund BlackRock Asia Extension Fund BlackRock Emerging s Absolute Return Fund BlackRock Emerging s Allocation Fund BlackRock Emerging s Flexi Dynamic Bond Fund Note Assets Securities portfolio at cost 8,243,436, ,158, ,266,279 62,021,192 47,456, ,835, ,936,103 2,794 2,024 (2,263,415) 1,027,279 (1,805,848) Securities portfolio at market value 8,495,372, ,160, ,268,303 59,757,777 48,483, ,029,478 Cash at bank 2(a) 438,835,344 14,048,895 17,918,542 6,091,165 8,785,826 18,927,704 Time Deposits 2(a) 40,081,574 Due from broker ,602,209 2,328,452 3,578,679 Dividend receivable on contracts for difference 8,388,953 88,804 6,301, ,795 Interest and dividends receivable 65,125, ,084 36,439 35, ,778 2,382,491 Interest and dividends receivable on swaps 681, ,377 Receivable for investments sold 2(a) 316,196,388 1,328,504 Receivable for Fund shares subscribed 31,349, , ,000 appreciation on: Open Exchange traded futures contracts 2(d) 3,944, ,967 42, ,161 Open Forward foreign exchange transactions 2(d) 2,308, ,986 Contracts for difference 2(d) 59,286,222 2,272,181 12,681,223 1,065,219 Open Futures-style options contracts 2(d) 157,103 value of swaps 2(d) 7,009,255 16,139 value of purchased options/swaptions 2(d) 6,381,530 Other assets 376,672 20,584 1,377 Total assets 9,579,097, ,701, ,404,304 69,738,034 59,707, ,385,876 Liabilities Cash owed to bank 4,300,101 Interest payable on contracts for difference 1,719, , ,090 10,342 19,572 Due to broker 13 24,246,572 1,660, ,887 2,864,472 Interest and dividends payable on swaps 3,413,587 Dividend payable on contracts for difference 2,626,238 61,360 Payable for investments purchased 2(a) 427,096,485 1,373,641 4,705,647 1,715,904 2,163,372 2,995,621 Payable for Fund shares redeemed 57,110, ,892 85,046 depreciation on: Open Exchange traded futures contracts 2(d) 32,463,551 46,510 Open Forward foreign exchange transactions 2(d) 23,679, , , Contracts for difference 2(d) 9,450, ,524 Open Futures-style options contracts 2(d) 209,650 value of swaps 2(d) 15,000,168 3,265,274 value of written options/swaptions 2(d) 7,481,891 Other liabilities 4,5,6,7 35,020, , , , , ,359 Total liabilities 643,818,557 4,621,502 6,227,649 3,370,181 5,261,027 6,499,300 Total net assets 8,935,278, ,079, ,176,655 66,367,853 54,446, ,886, BlackRock Strategic Funds (BSF)

13 Statement of Net Assets as at 30 November 2014 continued BlackRock Euro Dynamic Diversified Growth Fund BlackRock European Absolute Return Fund BlackRock European Constrained Credit Strategies Fund BlackRock European Credit Strategies Fund BlackRock European Diversified Equity Absolute Return Fund Note Assets Securities portfolio at cost 485,873, ,255, ,480,746 1,513,164, ,616,411 40,352,198 22,587,347 4,608,519 57,221,111 (24,850) Securities portfolio at market value 526,225, ,842, ,089,265 1,570,385, ,591,561 Cash at bank 2(a) 36,124,665 15,932,957 10,617,817 5,875,410 Time Deposits 2(a) Due from broker 13 14,412,042 6,483,176 4,514,001 25,606,084 Dividend receivable on contracts for difference 178,338 Interest and dividends receivable 485,355 1,950,908 1,988,782 25,108,629 1,397,237 Interest and dividends receivable on swaps Receivable for investments sold 2(a) 16,252,605 1,191,244 33,399,255 8,234,405 Receivable for Fund shares subscribed 671,131 3,896, ,638 appreciation on: Open Exchange traded futures contracts 2(d) 2,871,340 Open Forward foreign exchange transactions 2(d) 1,117,399 Contracts for difference 2(d) 14,199,611 2,624,809 Open Futures-style options contracts 2(d) value of swaps 2(d) 1,885,780 value of purchased options/swaptions 2(d) 2,946,025 79, ,036 Other assets 118,490 97,008 Total assets 586,858, ,558, ,577,135 1,655,321, ,542,398 Liabilities Cash owed to bank 3,449,601 Interest payable on contracts for difference 129,616 6,599 87, ,780 Due to broker 13 1,157,036 Interest and dividends payable on swaps 64, ,310 1,884,526 Dividend payable on contracts for difference 609,358 79,882 1,325,609 Payable for investments purchased 2(a) 11,440,161 1,669,993 43,201,593 Payable for Fund shares redeemed 713,600 10,760,175 11,709,660 10,936,742 47,050 depreciation on: Open Exchange traded futures contracts 2(d) 7,112, ,457 5,975,159 Open Forward foreign exchange transactions 2(d) 200, ,628 11,703, ,230 Contracts for difference 2(d) 479,679 6,764,318 Open Futures-style options contracts 2(d) value of swaps 2(d) 1,108,877 6,385,476 value of written options/swaptions 2(d) 3,604,637 Other liabilities 4,5,6,7 810,828 3,245, ,291 3,217,746 6,143,494 Total liabilities 5,193,595 33,497,167 17,131,376 94,931,815 8,284,590 Total net assets 581,664, ,061, ,445,759 1,560,389, ,257,808 The notes on pages 224 to 233 form an integral part of these financial statements. Unaudited Interim Report and Accounts 11

14 Statement of Net Assets as at 30 November 2014 continued BlackRock European Opportunities Extension Fund BlackRock Fixed Income Strategies Fund BlackRock Fund of ishares Conservative BlackRock Fund of ishares Dynamic BlackRock Fund of ishares Growth Note Assets Securities portfolio at cost 486,317,643 1,654,194,331 4,249,109 3,494,328 9,789,914 47,245,504 21,416, , ,095 1,274,469 Securities portfolio at market value 533,563,147 1,675,610,614 4,518,327 4,111,423 11,064,383 Cash at bank 2(a) 86,436,400 67,685,265 9,449 2, ,171 Time Deposits 2(a) 32,154,000 Due from broker 13 25,184,247 Dividend receivable on contracts for difference 611,651 Interest and dividends receivable 139,081 15,592,324 3,163 13,179 26,480 Interest and dividends receivable on swaps Receivable for investments sold 2(a) 3,277,757 79,862,959 17,575 Receivable for Fund shares subscribed 16,414,025 40,052 appreciation on: Open Exchange traded futures contracts 2(d) Open Forward foreign exchange transactions 2(d) Contracts for difference 2(d) 17,310,835 Open Futures-style options contracts 2(d) value of swaps 2(d) value of purchased options/swaptions 2(d) Other assets 7,589 9,126 19,141 Total assets 673,492,871 1,880,349,434 4,596,155 4,135,801 11,379,175 Liabilities Cash owed to bank Interest payable on contracts for difference 185,914 Due to broker 13 14,098,273 Interest and dividends payable on swaps 475,255 Dividend payable on contracts for difference Payable for investments purchased 2(a) 11,199,255 96,899,698 39,699 Payable for Fund shares redeemed 943,768 3,482,713 16,059 9, ,091 depreciation on: Open Exchange traded futures contracts 2(d) 11,704,211 Open Forward foreign exchange transactions 2(d) 2,578,442 1,484,634 Contracts for difference 2(d) Open Futures-style options contracts 2(d) 11,000 value of swaps 2(d) 1,832,366 value of written options/swaptions 2(d) Other liabilities 4,5,6,7 8,821,834 3,076,608 25,798 24,328 39,860 Total liabilities 37,827, ,966,485 81,556 34, ,951 Total net assets 635,665,385 1,761,382,949 4,514,599 4,101,479 11,066, BlackRock Strategic Funds (BSF)

15 Statement of Net Assets as at 30 November 2014 continued BlackRock Fund of ishares Moderate BlackRock Global Absolute Return Bond Fund BlackRock Global Long/Short Equity Fund (1) BlackRock Latin American Opportunities Fund BlackRock Multi-Strategy Absolute Return Fund (2) Note Assets Securities portfolio at cost 18,823, ,253,486 64,295, ,821,884 54,893,622 1,751,638 6,570,870 1, , ,947 Securities portfolio at market value 20,575, ,824,356 64,296, ,954,511 55,436,569 Cash at bank 2(a) 45,498 47,153,397 20,601,096 2,530,994 10,564,661 Time Deposits 2(a) Due from broker , ,475 1,438,161 Dividend receivable on contracts for difference 15,854 Interest and dividends receivable 32,658 2,716,548 7,125 76, ,180 Interest and dividends receivable on swaps 480,917 Receivable for investments sold 2(a) 65, ,383,924* 957,941 2,137,985* Receivable for Fund shares subscribed 412,002 59,650 3,236,130 appreciation on: Open Exchange traded futures contracts 2(d) Open Forward foreign exchange transactions 2(d) Contracts for difference 2(d) 699,289 13,639 Open Futures-style options contracts 2(d) 126,030 value of swaps 2(d) 3,724,045 value of purchased options/swaptions 2(d) 1,082, ,260 Other assets 27,215 5,977 Total assets 21,157, ,196,881 89,915, ,562,386 70,189,309 Liabilities Cash owed to bank Interest payable on contracts for difference 31,667 31,645 Due to broker 13 Interest and dividends payable on swaps 10,801 Dividend payable on contracts for difference 53,268 Payable for investments purchased 2(a) 410, ,802,073* 538,015 4,135,816* Payable for Fund shares redeemed 62,109 3,434,834 3,238,000 depreciation on: Open Exchange traded futures contracts 2(d) 495, ,513 Open Forward foreign exchange transactions 2(d) 945,517 43,503 31,090 Contracts for difference 2(d) Open Futures-style options contracts 2(d) 157, value of swaps 2(d) 87,177 value of written options/swaptions 2(d) 2,201, ,962 Other liabilities 4,5,6,7 58, , , ,420 69,688 Total liabilities 531, ,427,136 3,570,144 1,096,435 4,674,795 Total net assets 20,626, ,769,745 86,345, ,465,951 65,514,514 (1) The Fund commenced trading on 2 June (2) The Fund commenced trading on 25 June * Includes To be Announced ( TBA ), see Notes 2(a), for further details. The notes on pages 224 to 233 form an integral part of these financial statements. Unaudited Interim Report and Accounts 13

16 Three Year Summary of Net Asset s as at 30 November 2014 Currency 30 November May May May 2012 BlackRock Americas Diversified Equity Absolute Return Fund Total net assets 147,079, ,996, ,107,890 6,805,522 Net asset value per: A Class non-distributing share AUD A Class non-distributing share A Class non-distributing share hedged A Class non-distributing share SEK hedged SEK A Class UK reporting non-distributing fund share GBP D Class UK reporting non-distributing fund share hedged X Class non-distributing share BlackRock Asia Extension Fund Total net assets 197,176, ,666,153 46,420,675 9,075,074 Net asset value per: A Class non-distributing share AUD A Class non-distributing share A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share E Class non-distributing share X Class non-distributing share BlackRock Emerging s Absolute Return Fund Total net assets 66,367,853 42,070,995 13,023,136 Net asset value per: A Class non-distributing share A Class non-distributing share hedged A Class UK reporting distributing fund share GBP hedged GBP D Class non-distributing share D Class non-distributing share hedged D Class UK reporting distributing fund share GBP hedged GBP E Class non-distributing share hedged I Class non-distributing share I Class non-distributing share I Class non-distributing share hedged I Class UK reporting distributing fund share GBP GBP I Class UK reporting distributing fund share GBP hedged GBP X Class non-distributing share BlackRock Emerging s Allocation Fund Total net assets 54,446,448 51,601,993 Net asset value per: A Class non-distributing share C Class non-distributing share D Class non-distributing share E Class non-distributing share E Class non-distributing share hedged I Class non-distributing share X Class non-distributing share BlackRock Emerging s Flexi Dynamic Bond Fund Total net assets 188,886, ,999,972 Net asset value per: A Class non-distributing share A Class non-distributing share hedged A Class UK reporting distributing fund share GBP hedged GBP D Class distributing share GBP hedged GBP D Class non-distributing share D Class non-distributing share hedged D Class UK reporting distributing fund share GBP E Class non-distributing share E Class non-distributing share hedged I Class non-distributing share X Class non-distributing share BlackRock Strategic Funds (BSF)

17 Three Year Summary of Net Asset s as at 30 November 2014 continued Currency 30 November May May May 2012 BlackRock Euro Dynamic Diversified Growth Fund Total net assets 581,664, ,851, ,499,726 66,828,783 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 I Class non-distributing share SEK hedged SEK X Class non-distributing share BlackRock European Absolute Return Fund Total net assets 937,061,708 1,295,759,972 1,203,613, ,453,107 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 D Class non-distributing share CHF hedged CHF 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 118,445, ,397, ,882,229 65,665,525 Net asset value per: I Class non-distributing share BlackRock European Credit Strategies Fund Total net assets 1,560,389,819 1,493,888, ,717, ,259,688 Net asset value per: H Class non-distributing share H Class non-distributing share CHF hedged CHF H Class UK reporting non-distributing fund share GBP hedged GBP H Class UK reporting non-distributing fund share hedged I Class non-distributing share SEK hedged SEK 1, , I Class UK reporting non-distributing fund share I Class UK reporting non-distributing fund share GBP hedged GBP I Class UK reporting non-distributing fund share hedged T Class non-distributing share U Class non-distributing share U Class UK reporting non-distributing fund share GBP U Class UK reporting non-distributing fund share hedged 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 317,257, ,880, ,192, ,899,516 Net asset value per: A Class non-distributing share AUD A Class non-distributing share A Class non-distributing share CHF hedged CHF A Class non-distributing share SEK hedged SEK A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share hedged 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 The notes on pages 224 to 233 form an integral part of these financial statements. Unaudited Interim Report and Accounts 15

18 Three Year Summary of Net Asset s as at 30 November 2014 continued Currency 30 November May May May 2012 BlackRock European Opportunities Extension Fund Total net assets 635,665, ,216,924 11,081,561 10,575,753 Net asset value per: A Class non-distributing share A Class UK reporting distributing fund share GBP D Class distributing share D Class non-distributing share D Class UK reporting distributing fund share GBP E Class non-distributing share I Class non-distributing share X Class non-distributing share BlackRock Fixed Income Strategies Fund Total net assets 1,761,382, ,525, ,006,288 67,454,855 Net asset value per: A Class distributing share A Class distributing share CHF hedged CHF A Class distributing share hedged A Class non-distributing share A Class non-distributing share CHF hedged CHF A Class non-distributing share hedged D Class distributing share D Class non-distributing share D Class non-distributing share CHF hedged CHF D Class non-distributing share hedged D Class UK reporting distributing fund share GBP hedged GBP D Class UK reporting non-distributing fund share GBP hedged GBP E Class non-distributing share I Class distributing share I Class non-distributing share I Class non-distributing share SEK hedged SEK 1, X Class non-distributing share BlackRock Fund of ishares Conservative Total net assets 4,514,599 4,196,050 2,923,530 1,309,304 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 4,101,479 4,146,577 2,848,575 1,718,713 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 11,066,224 10,878,508 6,633,192 3,962,973 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 20,626,204 17,595,349 9,895,030 5,183,611 Net asset value per: K Class non-distributing share L Class non-distributing share M Class non-distributing share BlackRock Strategic Funds (BSF)

19 Three Year Summary of Net Asset s as at 30 November 2014 continued Currency 30 November May May May 2012 BlackRock Global Absolute Return Bond Fund Total net assets 467,769, ,603, ,704,772 50,002,078 Net asset value per: A Class non-distributing share A Class non-distributing share SEK hedged SEK 1, , , A Class non-distributing share hedged D Class non-distributing share E Class non-distributing share I Class non-distributing share I Class non-distributing share SEK hedged SEK 1, X Class non-distributing share BlackRock Global Long/Short Equity Fund (1) Total net assets 86,345,484 Net asset value per: A Class non-distributing share A Class non-distributing share SEK hedged SEK 1, A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share hedged D Class UK reporting non-distributing fund share GBP hedged GBP E Class non-distributing share hedged I Class non-distributing share hedged J Class distributing share X Class non-distributing share BlackRock Latin American Opportunities Fund Total net assets 110,465, ,907, ,714, ,326,906 Net asset value per: A Class non-distributing share A Class non-distributing share A Class UK reporting non-distributing fund share GBP C Class non-distributing share D Class non-distributing share D Class non-distributing share D Class UK reporting non-distributing fund share GBP BlackRock Multi-Strategy Absolute Return Fund (2) Total net assets 65,514,514 Net asset value per: A Class non-distributing share D Class non-distributing share I Class non-distributing share I Class non-distributing share GBP hedged GBP X Class non-distributing share (1) The Fund commenced trading on 2 June (2) The Fund commenced trading on 25 June The notes on pages 224 to 233 form an integral part of these financial statements. Unaudited Interim Report and Accounts 17