Interim Report Blackrock Investment Funds

Interim report BlackRock Investment Funds

• BlackRock Dynamic Return Strategy Fund • BlackRock Global Long/Short Equity Fund • BlackRock Sterling Strategic Bond Fund

For the six months ended 31 August 2017 Contents General Information

Manager & Registrar General Information 2 BlackRock Fund Managers Limited About the Trust 3 12 Throgmorton Avenue, London EC2N 2DL Telephone: 020 7743 3000 Dealing and Investor Services: 0800 44 55 22 Fund Managers 3 Member of The Investment Association and authorised and regulated by the Financial Conduct Authority. Changes to the Trust 3 Directors of the Manager Significant Events 4 G D Bamping* C L Carter (appointed 7 September 2017) R A Damm N C D Hall* (resigned 31 May 2017) R A R Hayes A M Lawrence E E Tracey M T Zemek* Notes to Financial Statements 5 * Non-executive Director.

BlackRock Dynamic Return Strategy Fund 6-14 Trustee BNY Mellon Trust & Depositary (UK) Limited BlackRock Global Long/Short Equity Fund 15-53 160 Queen Victoria Street, London EC4V 4LA BlackRock Sterling Strategic Bond Fund 54-68 Authorised and regulated by the Financial Conduct Authority.

Supplementary Information 69-70 Investment Manager BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue, London EC2N 2DL Authorised and regulated by the Financial Conduct Authority. Securities Lending Agent BlackRock Advisors (UK) Limited 12 Throgmorton Avenue, London EC2N 2DL Authorised and regulated by the Financial Conduct Authority. Investment Adviser BlackRock Financial Management, Inc 55 East 52nd Street, New York, NY 10055, United States Regulated by the Securities and Exchange Commission. Auditor Ernst & Young LLP 1 More London Place, London SE1 2AF Custodian The Bank of New York Mellon (International) Limited 1 Canada Square, London E14 5AL Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

BlackRock’s proxy voting agent is ISS (Institutional Shareholder Services).

This Report relates to the packaged products of and is issued by: BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Telephone: 020 7743 3000 Dealing and Investor Services: 0800 44 55 22 blackrock.co.uk

For your protection, telephone calls are usually recorded.

1 BlackRock Investment Funds BlackRock Investment Funds 2 About the Trust Significant Events

BlackRock Investment Funds (the “Trust”) is organised as an umbrella unit trust scheme comprising separate Potential Implication of Brexit funds with segregated liability (each referred to as a “Fund” and collectively the “Funds”). In a referendum held on 23 June 2016, the electorate of the United Kingdom (“UK”) resolved to leave the European Union (“EU”). The result has led to political instability and economic uncertainty, volatility in the The Trust is an authorised unit trust scheme and each Fund qualifies as a UCITS scheme under the Financial financial markets of the UK and more broadly across EU and a decline in the value of Sterling. Conduct Authority’s Collective Investment Schemes Sourcebook (the “COLL Sourcebook”). The longer term process to implement the political, economic and legal framework between the UK and the Cross sub-fund holdings within the Trust: EU is likely to lead to continuing uncertainty and periods of exacerbated volatility in both the UK and in wider As at 31 August 2017 and 28 February 2017 there were no cross sub-fund holdings within the Trust. European markets. In particular, the decision made in the British referendum may lead to a call for similar referendums in other European jurisdictions which may also cause increased economic volatility in wider European and global markets. The potential currency volatility resulting from this uncertainty may mean that Fund Managers the returns of a Fund and its investments are adversely affected by market movements. This may also make it more difficult, or more expensive, for a Fund to execute prudent currency hedging policies.

As at 31 August 2017, the Fund Managers are Adam Ryan, Andy Warwick, Kevin Franklin, Gearoid Neligan, This mid to long term uncertainty may have an adverse effect on the economy generally and on the ability of a Simon Blundell and Ben Edwards. Fund and its investments to execute their respective strategies and to receive attractive returns, and may also result in increased costs to a Fund.

Changes to the Trust Changes in the Directors of the Manager On 18 May 2017, N C D Hall resigned as a Director effective 31 May 2017. C L Carter was appointed as a Director effective 7 September 2017. Fund Closure The BlackRock Dynamic Return Strategy Fund will commence winding up in the third quarter of 2017. The decision to close the Fund has been taken in the best interest of unitholders and is a result of recent performance being below expectations. This has prompted some unitholders to redeem their holdings and has made it unlikely that further investments will be made into the Fund. Taking the above into consideration and in accordance with the rules of the Financial Conduct Authority, we have decided to wind up the Fund on the basis that it is no longer commercially viable.

3 BlackRock Investment Funds BlackRock Investment Funds 4 Notes to Financial Statements BlackRock Dynamic Return Strategy Fund for the six months ended 31 August 2017

Accounting Policies About the Fund The financial statements have been prepared in accordance with the Statement of Recommended Practice for Authorised Funds (the “SORP”) issued by the Investment Management Association (now known as the The Fund was a sub-fund of BlackRock Investment Funds, a UCITS scheme under the COLL Sourcebook. The Investment Association) in May 2014. Fund was authorised by the FCA on 2 March 2015 and was established on 30 March 2015.

The accounting policies applied are consistent with those of the financial statements for the year ended Fund Closure 28 February 2017 and are described in those annual financial statements. As set out in the letter to unitholders dated 17 May 2017, the Fund commenced winding up on 21 August 2017. The decision to close the Fund has been taken in the best interest of unitholders and is a result of recent performance being below expectations. This has prompted some unitholders to redeem their holdings and has made it unlikely that further investments will be made into the Fund. Taking the above into consideration and in accordance with the rules of the Financial Conduct Authority, we have decided to wind up the Fund on the basis that it is no longer commercially viable. As at 21 August 2017, all units in the Fund were cancelled. As a result, these financial statements are not prepared on a going concern basis for the period ended 31 August 2017, but on a break-up basis. The next set of financial statements for the year to 28 February 2018 will be the final set of accounts produced for this Fund.

Investment Objective & Policy

The aim of the Fund was to achieve a positive absolute return on a rolling three year basis regardless of market conditions. The level of return which the Fund aimed to generate over the medium to long term was equivalent to the return from cash (measured by 3 month GBP LIBOR) plus 6% a year, gross of fees. In addition, the Fund also sought to manage risk through active asset allocation with a view to having a lower volatility of return than would result from investing in a portfolio of global equity securities alone.

The Fund was managed with the aim of delivering absolute (more than zero) returns on a three year rolling basis in any market conditions. However, an absolute return was not guaranteed over three year rolling periods or any period and the Fund could have experienced periods of negative return. The Fund’s capital was at risk.

The Fund had a flexible approach to asset allocation and sought to diversify its exposure across a variety of asset classes globally including equity securities, fixed income securities, money–market instruments, deposits, cash and near cash, and derivatives. The Fund could have held indirect exposure to alternative asset classes such as commodities or property through eligible index derivatives, eligible collective investment schemes or structured securities.

In order to gain this exposure the Fund utilised a variety of investment strategies and eligible instruments. For example, it could have invested in any or all of the following: transferable securities (equity securities and fixed income securities), money–market instruments, deposits, cash and near cash and units of collective investment schemes. The Fund could have invested in a full range of fixed income securities and money market instruments which may have included non-investment grade securities.

To achieve its investment objective, the Fund could have taken full advantage of the ability to use derivatives. A significant proportion of the Fund’s portfolio could have consisted of derivatives on a daily basis.

The Fund’s exposure could have varied over time as determined by the Investment Manager at its sole discretion.

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Performance Table Investment Report

Period of Report Fund Closure from 1.3.2017 On 21 August 2017, in accordance with the rules of the UK Financial Conduct Authority (the FCA), we decided to 31.8.2017^ to wind up the Fund on the basis that it is no longer commercially viable, and we believe this decision was TOTAL RETURN (with net income reinvested) in the best interests of shareholders. The Fund was closed because of its relatively small size and the unlikelihood of further investments into the Fund. Class D Accumulation Units*

BlackRock Dynamic Return Strategy Fund +3.1% Summary of Performance over the Period 3 month Sterling LIBOR +6%† +0.2% The Fund rose by 3.1%* over the reporting period from 1 March 2017 to 21 August 2017, outperforming its

All Fund figures quoted are based on bid-to-bid prices (the price at which units are sold) and are calculated net of fees. cash benchmark, the 3-month Sterling LIBOR, which rose by 0.2%. Performance returns are cumulative. All returns are in Sterling. § Three and five year performance data does not exist as the Fund launched in March 2015. † Figures from Datastream. Fund Manager’s Commentary The Fund’s performance is not measured in reference to a benchmark index. For purely reference purposes we are showing the 3 month Sterling LIBOR as an indicator of the Economic growth and improving corporate earnings pushed global share markets higher despite global general return on cash investments over the period. ^ The Fund commenced termination from 21 August 2017. Performance returns are shown from the beginning of the period to the date the Fund commenced termination. events including the launch of the UK’s process to leave the European Union. In the US, investors became less optimistic that President Trump would be able to enact his pro-business agenda; however, stocks continued to move higher based on solid company fundamentals and encouraging economic data. All financial investments involve an element of risk. Therefore, the value of your investment and the income Emerging-market shares outperformed their developed-market counterparts, driven by weakness in the from it will vary and the return of your initial investment amount cannot be guaranteed. Changes in exchange US dollar and improving commodity prices. The US Federal Reserve took steps towards unwinding its rates may cause the value of an investment to fluctuate. Past performance is not a guide to future performance programmes put in place to stimulate economic growth. Meanwhile, analysts speculated about when the and should not be the sole factor of consideration when selecting a product. European Central Bank would begin to scale back its own stimulus measures. Overall, bond yields were low, with investors’ appetite for riskier assets robust for much of the period. In August, however, North Korea’s missile tests intensified global concerns, prompting investors to buy assets perceived as more stable or defensive, including gold, higher-rated bonds, the Swiss franc and the Japanese yen.

Before its closure during the reporting period, the Fund delivered a positive return, driven by the developed- market shares and fixed-income exposures. Within developed-market shares, strong returns came from the broad global exposures provided by the consumer-focused bespoke Global Brands basket. Regionally, the exposure to investments in European share markets, particularly from the share buyback basket and exposure to investments in banks and healthcare, drove the Fund’s return. Meanwhile, as expected, equity-hedging positions (stock exposures that we held where we believed stocks would go down in value) detracted in a period of positive returns from global share markets. Emerging-market share exposures detracted, as we paid out for protection on South Korean share markets, which rose over the period. The long Indonesia versus Turkey strategy also undermined returns, as Turkish share markets outperformed.

In fixed income, positive returns came from both government and corporate bond exposures. The Fund saw strong positive returns from the exposure to investments in global corporate bonds, as the spread between corporate and government bonds compressed. Within government bonds, positive returns were driven from the selective exposure to investments in emerging-market debt and the short German government bond exposure. Elsewhere, positive returns from volatility strategies (which focus on market ups and downs) and commodity exposures more than offset weakness from currency exposures.

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Investment Report continued Performance Record

Activity Net Asset Value Over the period, we increased the exposure to investments in developed-market share markets by reducing Net Asset Value US equity-hedging positions, and increasing exposure to domestically focused European and Japanese Net Asset Value# per Unit# share markets. In fixed income, we cut exposure to emerging-market debt and bought back the short German Units in Issue# £000’s p government bond exposure. Elsewhere, we eliminated exposure to gold, while adding to movement strategies D Accumulation 19,943 19 92.63 that aim to generate positive returns, over the long term from, differences between expected and actual market ups and downs. I Accumulation 7,154,119 7,295 102.0 X Accumulation 2,332,751 2,440 104.6 September 2017 # Balance immediately prior to the final cancellation and the commencement of the termination of the Fund on 21 August 2017. * Performance figures quoted are based on bid-to-bid dealing prices (the price at which units are sold). Performance is calculated net of fees and reported for the Fund’s class D Accumulation Units. Distribution Payable for the period to 31 August 2017 The Manager decided not to make a final distribution at the point of closure.

Operating Charges

1.3.2017 1.3.2016 Unit Class to 31.8.2017^ to 28.2.2017 D Accumulation 0.92% 0.89% I Accumulation 0.87% 0.84% X Accumulation 0.07% 0.04%

Operating charges are annualised and exclude portfolio trade-related costs, except costs paid to the custodian/depositary and entry/exit charges paid to an underlying collective investment scheme (if any). ^ The Fund commenced termination from 21 August 2017. Operating charges are shown from the beginning of the period to the date the Fund commenced termination.

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Portfolio Statement (unaudited) Portfolio Statement (unaudited) continued at 31 August 2017

Holding or Market % of Holding or Market % of Nominal Value Total Net Nominal Value Total Net Value Investment £000’s Assets Value Investment £000’s Assets

UNITED KINGDOM – 0.00%; 28.2.2017 6.11% INVESTMENT FUNDS – 0.00%; 28.2.2017 8.35% EQUITIES – 0.00%; 28.2.2017 1.43% Commodities – 0.00%; 28.2.2017 3.49% BONDS – 0.00%; 28.2.2017 4.68% Fixed Interest – 0.00%; 28.2.2017 4.65% UK Sterling Denominated Fixed Rate Corporate Bonds – 0.00%; 28.2.2017 4.05% Investment Companies – 0.00%; 28.2.2017 0.21% UK Sterling Denominated Variable Rate Corporate Bonds – 0.00%; 28.2.2017 0.63% DERIVATIVES – 0.00%; 28.2.2017 0.92% EUROPE – 0.00%; 28.2.2017 20.57% Credit Default Swaps – 0.00%; 28.2.2017 (0.01)% EQUITIES – 0.00%; 28.2.2017 0.86% Forward Currency Contracts – 0.00%; 28.2.2017 (0.60)% DKK 2,190,000 Danish krone vs UK sterling 3 – BONDS – 0.00%; 28.2.2017 19.71% €7,060,000 Euro vs UK sterling 91 – Danish Kroner Denominated Fixed Rate Corporate Bonds – 0.00%; 28.2.2017 0.48% INR 426,961,600 Indian rupee vs US dollar 100 – Euro Denominated Fixed Rate Corporate Bonds – 0.00%; 28.2.2017 10.08% TWD 195,374,855 Taiwan dollar vs US dollar 41 – £263,922 UK sterling vs Danish krone (7) – Euro Denominated Fixed Rate Government Bonds – 0.00%; 28.2.2017 5.65% £6,320,301 UK sterling vs Euro (181) – Euro Denominated Variable Rate Corporate Bonds – 0.00%; 28.2.2017 0.56% £16,146,795 UK sterling vs US dollar (265) – $6,500,000 US dollar vs Indian rupee (40) – Polish Zloty Denominated Fixed Rate Government Bond – 0.00%; 28.2.2017 2.94% $6,500,000 US dollar vs Taiwan dollar 2 – ASIA PACIFIC – 0.00%; 28.2.2017 1.00% $21,133,000 US dollar vs UK sterling 93 – EQUITIES – 0.00%; 28.2.2017 0.55% (163) – BONDS – 0.00%; 28.2.2017 0.45% Futures – 0.00%; 28.2.2017 (0.08)% Australian Dollar Denominated Fixed Rate Corporate Bonds – 0.00%; 28.2.2017 0.45% Options – 0.00%; 28.2.2017 0.08% NORTH AMERICA – 0.00%; 28.2.2017 57.29% Total Return Swaps – 0.00%; 28.2.2017 1.53%

EQUITIES – 0.00%; 28.2.2017 26.64% Portfolio of Investments (163) 0.00 United States of America – 0.00%; 28.2.2017 26.64% Net other assets 163 0.00 BONDS – 0.00%; 28.2.2017 30.65% Total net assets – 0.00

Canadian Dollar Denominated Fixed Rate Government Bonds – 0.00%; 28.2.2017 0.24% Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market. The portfolio was liquidated in advance of the commencement of termination, hence the nil values in the above statement. However, due to the nature of the US Dollar Denominated Fixed Rate Corporate Bonds – 0.00%; 28.2.2017 19.16% contracts, the forward currency contracts will close out in accordance with their specific contract terms. The counterparties for the forward currency contracts are Bank of America, Barclays Bank Plc, CitiGroup Global Markets Limited, Deutsche Bank AG, Goldman US Dollar Denominated Fixed Rate Government Bonds – 0.00%; 28.2.2017 9.09% Sachs International, HSBC Bank Plc, J.P. Morgan Securities Plc, Morgan Stanley & Co. International Plc, Nomura International Plc, Royal Bank of Scotland Plc and UBS AG. US Dollar Denominated Variable Rate Corporate Bonds – 0.00%; 28.2.2017 2.16% SOUTH AMERICA – 0.00%; 28.2.2017 4.66% BONDS – 0.00%; 28.2.2017 4.66% Mexican Peso Denominated Fixed Rate Government Bonds – 0.00%; 28.2.2017 4.66%

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Statement of Total Return (unaudited) Balance Sheet (unaudited) for the six months ended 31 August 2017 at 31 August 2017

31.8.2017 31.8.2016 31.8.2017 28.2.2017 £000’s £000’s £000’s £000’s £000’s £000’s Income Assets: Net capital gains/(losses) 5,366 (5,418) Fixed assets Revenue 1,579 1,798 – Investment assets 330 195,943 Expenses (314) (445) Current assets Interest payable and similar charges (209) (193) – Debtors 23 77,198 Net revenue before taxation 1,056 1,160 – Cash and bank balances 211 5,257 Taxation (64) (38) – Cash collateral posted – 270 Net revenue after taxation 992 1,122 Total assets 564 278,668 Total return before distributions 6,358 (4,296) Liabilities: Distributions – (1,122) Investment liabilities (493) (5,317) Change in net assets attributable Creditors to unitholders from investment – Amounts held at futures clearing houses and brokers – (24) activities 6,358 (5,418) – Bank overdrafts (1) (3) – Cash collateral payable – (3,080) Statement of Change in Net Assets Attributable to Unitholders – Other creditors (70) (77,507) Total liabilities (564) (85,931) (unaudited) for the six months ended 31 August 2017 Net assets attributable to unitholders – 192,737 31.8.2017 31.8.2016 £000’s £000’s £000’s £000’s G D Bamping (Director) Opening net assets attributable M T Zemek (Director) to unitholders 192,737 214,419 BlackRock Fund Managers Limited Amounts receivable on issue of units 496 22,331 17 October 2017 Amounts payable on cancellation of units (199,591) (7,965) (199,095) 14,366 Change in net assets attributable to unitholders from investment activities 6,358 (5,418) Retained distribution on accumulation units – 931 Closing net assets attributable to unitholders – 224,298

The above statement shows the comparative closing net assets at 31 August 2016 whereas the current accounting period commenced 1 March 2017.

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About the Fund Risk and Reward Profile

The Fund is a sub-fund of BlackRock Investment Funds, a UCITS scheme under the COLL Sourcebook. The Lower risk Higher risk Fund was authorised by the FCA on 28 August 2015 and was established on 1 October 2015. Typically lower rewards Typically higher rewards Unit Class A Accumulation 1 2 3 4 5 6 7 Investment Objective & Policy D Accumulation 1 2 3 4 5 6 7 The Fund seeks to achieve a positive absolute return on a twelve month basis regardless of market X Accumulation 1 2 3 4 5 6 7 movements. The Fund will seek to achieve this investment objective by taking long, synthetic long and synthetic short investment exposures. • The risk indicator was calculated incorporating simulated historical data and may not be a reliable The Fund will be managed with the aim of delivering absolute (more than zero) returns on a twelve month indication of the future risk profile of the Fund. basis in any market conditions. However, an absolute return is not guaranteed over a twelve month or any • The risk category shown is not guaranteed and may change over time. period and the Fund may experience periods of negative return. The Fund’s capital is at risk. • The lowest category does not mean risk free. The Fund will seek to gain investment exposure primarily through equities and equity-related securities • The use of derivatives will impact the value of the Fund and may expose the Fund to a higher degree of (including derivatives) of, or giving exposure to, companies domiciled in, or exercising the predominant part of risk. Derivatives are highly sensitive to changes in the value of the asset on which they are based and can their economic activity in, developed markets. increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. The impact to the Fund can be greater where derivatives are used in an extensive or complex way. The Fund will seek to achieve this investment objective by investing primarily in equities and equity-related securities and, when determined appropriate, cash and near-cash instruments. The Fund will be highly For more information on this, please see the Fund’s Key Investor Information Documents (“KIIDs”), which are diversified across the universe of global developed market securities, whilst seeking to generate returns with available at www.blackrock.com. a low correlation to the global developed equity market. In order to achieve the investment objective and policy, the Fund will invest in a variety of investment strategies and instruments. The Fund intends to take full advantage of the ability to invest in derivatives providing synthetic long and/or synthetic short positions with the aim of maximising positive returns. A significant proportion of the Fund’s portfolio may consist of derivatives on a daily basis.

The Fund’s exposure will vary over time as determined by the Investment Manager and/or the Investment Advisor in their discretion.

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Performance Table The following charts provide an analysis of the portfolio weightings as at 31 August 2017 and 28 February 2017 by its respective asset types.

§ For the six months Due to the nature of the Fund’s investment strategy which involves taking long positions and using derivatives to 31.8.2017 to take synthetic long and synthetic short investment positions, the % holdings are based on the underlying TOTAL RETURN (with net income reinvested) notional value of any such synthetic positions. This leads to a higher % value compared to an equivalent value Class D Accumulation Units based on the accounting or fair value of such synthetic positions.

BlackRock Global Long/Short Equity Fund +5.6% Please note the positions below include both long and short positions and are based on a synthetic net asset value created by using the notional gross absolute value. BofA ML Sterling 3 Month LIBOR* +0.2%

All Fund figures quoted are based on bid-to-bid prices (the price at which units are sold) and are calculated net of fees. Performance returns are cumulative. All returns are in Sterling. 31 August 2017 § Three and five year performance data does not exist as the Fund launched in October 2015. * Figures from Index Vendor. The Fund’s performance is not measured in reference to a benchmark index. For purely reference purposes we are showing the BofA ML Sterling 3 Month LIBOR as an indicator  Australian Dollar Contracts for Differences 2.83% (Long CFDs 2.35%, of the general return on cash investments over the period. Short CFDs 0.48%) (28.2.17: 2.15%)  Canadian Dollar Contracts for Differences 4.43% (Long CFDs 2.07%, All financial investments involve an element of risk. Therefore, the value of your investment and the income Short CFDs 2.36%) (28.2.17: 4.96%) from it will vary and the return of your initial investment amount cannot be guaranteed. Changes in exchange  Danish Krone Contracts for Differences 1.97% (Short CFDs 1.97%) rates may cause the value of an investment to fluctuate. Past performance is not a guide to future performance (28.2.17: 0.84%) and should not be the sole factor of consideration when selecting a product.  Euro Contracts for Differences 16.05% (Long CFDs 7.95%, Short CFDs 8.10%) (28.2.17: 14.42%)  Hong Kong Dollar Contracts for Differences 1.05% (Long CFDs 0.98%, Short CFDs 0.07%) (28.2.17: 1.51%)  Israeli Shekel Contracts for Differences 0.00% (Long CFDs 0.00%) (28.2.17: 0.04%)  Japanese Yen Contracts for Differences 13.82% (Long CFDs 7.91%, Short CFDs 5.91%) (28.2.17: 14.49%)  New Zealand Dollar Contracts for Differences 0.00% (Long CFDs 0.00%) 28 February 2017 (28.2.17: 0.03%)  Norwegian Krone Contracts for Differences 0.32% (Long CFDs 0.32%) (28.2.17: 0.63%)  Singapore Dollar Contracts for Differences 0.48% (Short CFDs 0.48%) (28.2.17: 1.50%)  Swedish Krone Contracts for Differences 0.74% (Long CFDs 0.18%, Short CFDs 0.56%) (28.2.17: 1.99%)  Swiss Franc Contracts for Differences 1.75% (Long CFDs 1.02%, Short CFDs 0.73%) (28.2.17: 3.72%)  United Kingdom Sterling Contracts for Differences 8.63% (Long CFDs 4.96%, Short CFDs 3.67%) (28.2.17: 10.20%)  United States Dollar Contracts for Differences 47.93% (Long CFDs 24.75%, Short CFDs 23.18%) (28.2.17: 43.52%)

At the end of the period, the Fund also held 85.09% (28.2.17: 87.28%) in bonds. These instruments are used both to provide cover for derivative positions such as Contracts for Differences (“CFDs”) and also with the intention of generating a higher rate of return than if derivatives were covered by cash held in a current account. For this purpose, cover of CFDs is measured by reference to the current notional exposure of the CFD, in other words, the economic interest in the security underlying the CFD, although only the difference between the price on opening the position and the price on closing the position is settled.

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Investment Report Performance Record

Summary of Performance over the Period Net Asset Value The Fund rose by 5.6%* over the six months from 1 March 2017 to 31 August 2017. Net Asset Value Net Asset Value per Unit The Fund is not managed in reference to an index. For purely reference purposes, BofA ML Sterling 3 Month At 31 August 2017 Units in Issue £000’s p LIBOR, an indicator of the general return on cash investments over the period, returned 0.2%. A Accumulation 1,000 1 100.6

Fund Manager’s Commentary D Accumulation 1,000 1 100.5 A positive view on European recovery was a key driver of the Fund’s strong returns over the period. This view X Accumulation 6,583,893 6,754 102.6 has been backed by improving economic activity, attractive valuations and the region’s relatively out-of-favour status with investors as the year began. Over the period, investors warmed to European stocks, encouraged Distribution Payable for the period to 31 August 2017 by easing political concerns and strong economic data. Several long positions (holdings in stocks that Distribution payable on 31.10.2017 we expect to go up) in stocks that stand to benefit most from economic recovery, such as the German Unit Class Pence per Unit construction company Hochtief, were among the top contributors to returns. Positive views on the healthcare and technology sectors were also beneficial, as investors favoured companies enjoying high levels of growth. A Accumulation 0.0000* D Accumulation 0.0000* At the stock level, a long position in up-and-coming UK beverages company Fever-Tree Drinks was the top X Accumulation 0.2475 contributor. Shares in the stock rose after the company reported stronger-than-expected results and provided a positive outlook for the remainder of the year. * The A Accumulation and D Accumulation classes recorded a net revenue shortfall for the period to 31 August 2017. Accordingly no distribution was payable.

The Fund had a positive view on US retailers, including Target, because of their conservative and stable Operating Charges balance sheets. This was unhelpful to returns, after disappointing earnings results across the industry increased 1.3.2017 1.3.2016 investors’ concerns about the future of traditional retail in the US, given the competition from online retail. Unit Class to 31.8.2017 to 28.2.2017† A Accumulation 1.94% 1.96% Activity The Fund has started to increase its positive emphasis on sectors that are less affected by the economic D Accumulation 1.36% 1.36% environment. Establishing long positions in consumer staples and telecoms, and a short position (a holding X Accumulation 0.17% 0.17% of a stock that we expect to go down) in healthcare, were the notable positioning changes at the beginning of Operating charges are annualised and exclude portfolio trade-related costs, except costs paid to the custodian/depositary and entry/exit charges paid to an underlying the period. collective investment scheme (if any).

Outlook Key investment factors that we are monitoring include political risk, as we are highly conscious of the potential for geopolitical concerns to unsettle markets, and relatively expensive share-market valuations. Our positive view on Europe has also moderated, given the strong performance from the region.

September 2017

* Performance figures quoted are based on bid-to-bid dealing prices (the price at which units are sold). Performance is calculated net of fees and reported for the Fund’s class D Accumulation Units.

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Portfolio Statement (unaudited) Portfolio Statement (unaudited) continued at 31 August 2017

Holding or Notional Mark to % of Holding or Notional Mark to % of Nominal Value Market Value Total Net Nominal Value Market Value Total Net Value Investment £000’s £000’s Assets Value Investment £000’s £000’s Assets

UK Sterling Denominated Government Bonds – 85.09%; 28.2.2017 87.28% General Retailers – (0.04)%; 28.2.2017 (0.02)% £1,470,000 Treasury 0% Bonds 4/9/2017 1,470 21.76 12,504 CSR 31 (1) (0.01) £480,000 Treasury 0% Bonds 11/9/2017 480 7.10 10,562 Harvey Norman 26 (2) (0.03) £800,000 Treasury 0% Bonds 18/9/2017 800 11.84 63 Wesfarmers^ 2 – 0.00 £1,600,000 Treasury 0% Bonds 2/10/2017 1,599 23.67 59 (3) (0.04) £400,000 Treasury 0% Bonds 9/10/2017 400 5.92 £500,000 Treasury 0% Bonds 16/10/2017 500 7.40 Healthcare Equipment & Services – 0.01%; 28.2.2017 0.00% £200,000 Treasury 0% Bonds 6/11/2017 200 2.96 375 Cochlear 36 1 0.01 £300,000 Treasury 0% Bonds 20/11/2017 300 4.44 Industrial Engineering – 0.00%; 28.2.2017 0.02% 5,749 85.09 Industrial Metals & Mining – (0.01)%; 28.2.2017 0.00% DERIVATIVES – 0.40%; 28.2.2017 0.47% 1,036 BlueScope Steel 7 (1) (0.01) 2,434 Fortescue Metals^ 9 – 0.00 AUSTRALIAN DOLLAR – 0.03%; 28.2.2017 0.01% 16 (1) (0.01) CONTRACTS FOR DIFFERENCES (“CFDs”) SHORT – 0.02%; 28.2.2017 0.04% Leisure Goods – 0.00%; 28.2.2017 0.00% Banks – 0.00%; 28.2.2017 0.00% 274 JB Hi-Fi^ 4 – 0.00 (2,989) CYBG^ 9 – 0.00 Mining – 0.00%; 28.2.2017 (0.02)% Chemicals – 0.00%; 28.2.2017 0.02% 47 Mineral Resources^ – – 0.00 Fixed Line Telecommunications – 0.01%; 28.2.2017 0.02% 79 Oz Minerals^ – – 0.00 (7,137) Vocus Communications 10 1 0.01 39 Rio Tinto^ 2 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% 2 – 0.00 (1) Brambles^ – – 0.00 Oil Equipment, Services & Distribution – 0.01%; 28.2.2017 (0.05)% Industrial Transportation – 0.00%; 28.2.2017 0.00% 1,798 Caltex Australia 37 1 0.01 (3,012) Qube^ 5 – 0.00 Travel & Leisure – 0.00%; 28.2.2017 0.04% ^ Mining – 0.01%; 28.2.2017 0.00% 6,674 Aristocrat Leisure 87 – 0.00 ^ (16,098) Independence 33 1 0.01 7,359 Qantas Airways 26 – 0.00 113 – 0.00 Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 0.00% (1,257) APA^ 7 – 0.00 CANADIAN DOLLAR – 0.00%; 28.2.2017 0.07% CFDs LONG – 0.01%; 28.2.2017 (0.03)% CFDs SHORT – (0.04)%; 28.2.2017 0.07% Beverages – 0.00%; 28.2.2017 0.00% Beverages – 0.00%; 28.2.2017 0.05% 1,042 Coca-Cola Amatil^ 5 – 0.00 (3,028) Cott^ 36 – 0.00 Financial Services – 0.04%; 28.2.2017 0.00% Chemicals – 0.01%; 28.2.2017 0.00% 806 Perpetual Trustees Australia 27 2 0.03 (4,394) Potash of Saskatchewan 59 1 0.01 1,889 Platinum Asset Management 7 1 0.01 Financial Services – 0.00%; 28.2.2017 (0.02)% 34 3 0.04 (6,145) Element Financial^ 34 – 0.00 Food & Drug Retailers – 0.00%; 28.2.2017 0.00% Food & Drug Retailers – 0.00%; 28.2.2017 0.00% 795 Woolworths^ 13 – 0.00 (64) George Weston^ 4 – 0.00

21 BlackRock Investment Funds BlackRock Investment Funds 22 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Industrial Engineering – 0.00%; 28.2.2017 0.00% Financial Services – 0.00%; 28.2.2017 0.00% (82) Ritchie Bros. Auctioneers^ 2 – 0.00 173 IGM Financial^ 4 – 0.00 Industrial Metals & Mining – 0.00%; 28.2.2017 0.00% Fixed Line Telecommunications – 0.00%; 28.2.2017 0.00% (594) First Quantum Minerals^ 5 – 0.00 484 Telus^ 13 – 0.00 Mining – (0.02)%; 28.2.2017 0.02% Food Producers – (0.01)%; 28.2.2017 0.02% (1,690) Centerra Gold 8 (1) (0.01) 1,458 Maple Leaf Foods 31 (1) (0.01) (5,576) Ivanhoe Mines 16 (1) (0.01) Forestry & Paper – 0.00%; 28.2.2017 0.00% (3,071) OceanaGold^ 7 – 0.00 109 Domtar^ 3 – 0.00 (1,093) Pretium Resources^ 7 – 0.00 (51) Torex Gold Resources^ 1 – 0.00 Industrial Metals & Mining – 0.01%; 28.2.2017 0.00% 529 Teck Resources 10 1 0.01 39 (2) (0.02) Industrial Transportation – 0.01%; 28.2.2017 0.00% Non-Life Insurance – 0.00%; 28.2.2017 0.02% 192 Canadian National Railway^ 12 – 0.00 Oil & Gas Producers – 0.00%; 28.2.2017 0.00% 381 Canadian Pacific Railway 46 1 0.01 (583) Tourmaline Oil^ 8 – 0.00 58 1 0.01 (235) Whitecap Resources^ 1 – 0.00 Life Insurance – 0.00%; 28.2.2017 0.00% 9 – 0.00 295 Great-West Lifeco^ 6 – 0.00 Oil Equipment, Services & Distribution – (0.03)%; 28.2.2017 0.00% Media – 0.00%; 28.2.2017 0.00% (3,699) Emera 109 (2) (0.03) 346 Quebecor^ 10 – 0.00 Software & Computer Services – 0.00%; 28.2.2017 0.00% 428 Thomson Reuters^ 15 – 0.00 (376) Open Text^ 9 – 0.00 25 – 0.00 Support Services – 0.00%; 28.2.2017 0.00% Mining – 0.00%; 28.2.2017 0.00% (79) MacDonald, Dettwiler and Associates^ 3 – 0.00 382 HudBay Minerals^ 3 – 0.00 (787) Stantec^ 16 – 0.00 2,140 Kinross Gold^ 7 – 0.00 19 – 0.00 10 – 0.00 CFDs LONG – 0.04%; 28.2.2017 0.00% Mobile Telecommunications – 0.00%; 28.2.2017 0.00% Automobiles & Parts – 0.00%; 28.2.2017 0.00% 170 Rogers Communications^ 7 – 0.00 151 Magna International^ 5 – 0.00 Oil & Gas Producers – 0.00%; 28.2.2017 0.00% Banks – 0.00%; 28.2.2017 0.00% 831 Crescent Point Energy^ 4 – 0.00 474 Bank of Nova Scotia^ 23 – 0.00 1,552 Enerplus^ 10 – 0.00 188 Canadian Imperial Bank of Commerce^ 12 – 0.00 169 Vermilion Energy^ 4 – 0.00 35 – 0.00 18 – 0.00 Chemicals – 0.03%; 28.2.2017 0.00% Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 (0.02)% 498 Methanex Corp 19 2 0.03 1,579 Inter Pipeline^ 22 – 0.00 Electronic & Electrical Equipment – 0.00%; 28.2.2017 0.00% Software & Computer Services – 0.00%; 28.2.2017 0.00% 680 Celestica^ 6 – 0.00 151 CGI class ‘A’ shares^ 6 – 0.00

23 BlackRock Investment Funds BlackRock Investment Funds 24 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Travel & Leisure – 0.00%; 28.2.2017 0.00% Chemicals – 0.01%; 28.2.2017 0.02% 59 Air Canada^ 1 – 0.00 (1,029) Air Liquide 98 1 0.01 (378) K & S^ 7 – 0.00 DANISH KRONE – 0.01%; 28.2.2017 (0.02)% (1,906) Symrise^ 108 – 0.00 CFDs SHORT – 0.01%; 28.2.2017 0.00% 213 1 0.01 Banks – 0.01%; 28.2.2017 0.00% Construction & Materials – 0.03%; 28.2.2017 0.02% (421) Jyske Bank 20 1 0.01 (1,769) Boskalis Westminster 45 2 0.03 Construction & Materials – 0.00%; 28.2.2017 0.00% (40) Eiffage^ 3 – 0.00 (47) FLSmidth^ 2 – 0.00 (283) Ferrovial^ 5 – 0.00 (437) Sacyr^ 1 – 0.00 Electronic & Electrical Equipment – 0.01%; 28.2.2017 0.00% (206) NKT 13 1 0.01 54 2 0.03 Financial Services – (0.02)%; 28.2.2017 0.00% Electricity – 0.00%; 28.2.2017 0.00% (1,581) Nets 30 (1) (0.01) (5,442) EDP Energias^ 16 – 0.00 (1,033) Novo Nordisk class ‘B’ shares 38 (1) (0.01) (402) Fortum^ 6 – 0.00 68 (2) (0.02) 22 – 0.00 Gas, Water & Multi-utilities – 0.01%; 28.2.2017 0.00% Financial Services – 0.00%; 28.2.2017 0.00% (2,659) DONG Energy 107 1 0.01 (201) Grand City Properties^ 3 – 0.00 Industrial Transportation – 0.01%; 28.2.2017 0.00% Food Producers – 0.00%; 28.2.2017 0.00% (26) AP Moeller-Maersk series ‘A’ shares 39 1 0.01 (395) Danone^ 24 – 0.00 Pharmaceuticals & Biotechnology – (0.01)%; 28.2.2017 0.00% Household Goods & Home Construction – 0.00%; 28.2.2017 0.00% (480) Novozymes class ‘B’ shares 19 (1) (0.01) (18) Bic^ 2 – 0.00 (61) Ontex^ 2 – 0.00 CFDs LONG – 0.00%; 28.2.2017 (0.02)% 4 – 0.00 Alternative Energy – 0.00%; 28.2.2017 (0.02)% Industrial Engineering – 0.06%; 28.2.2017 0.05% EUROS – (0.19)%; 28.2.2017 (0.04)% (3,069) GEA 105 4 0.06 CFDs SHORT – 0.17%; 28.2.2017 0.08% (205) Kion^ 14 – 0.00 (258) MAN^ 22 – 0.00 Aerospace & Defense – 0.00%; 28.2.2017 (0.05)% (107) Metso^ 3 – 0.00 Automobiles & Parts – (0.04)%; 28.2.2017 0.00% (25) Sartorius preference shares^ 2 – 0.00 (2,076) Fiat Chrysler Automobiles 24 (4) (0.06) 146 4 0.06 (372) Volkswagen preference shares 43 1 0.02 Industrial Metals & Mining – 0.01%; 28.2.2017 0.02% 67 (3) (0.04) (4,367) Tenaris 45 1 0.01 Banks – 0.04%; 28.2.2017 0.00% Industrial Transportation – 0.01%; 28.2.2017 0.04% (14,222) Banco Sabadell^ 24 – 0.00 (11,659) Bollore 41 1 0.01 (6,704) Banco Santander 34 1 0.01 (401) Eurotunnel^ 4 – 0.00 (4,747) Deutsche Bank 59 2 0.03 (54) Raiffeisen International Bank^ 1 – 0.00 45 1 0.01 118 3 0.04

25 BlackRock Investment Funds BlackRock Investment Funds 26 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Leisure Goods – 0.00%; 28.2.2017 0.00% Chemicals – (0.01)%; 28.2.2017 (0.05)% (143) Amer Sports^ 3 – 0.00 388 Arkema 33 (1) (0.01) 2,173 DSM^ 129 – 0.00 Media – 0.00%; 28.2.2017 0.00% 103 Lenzing 13 (1) (0.01) (526) SES Global FDR (each representing 255 Wacker Chemie 25 1 0.01 1 class ‘A’ share)^ 9 – 0.00 (2,282) Technicolor^ 6 – 0.00 200 (1) (0.01) 15 – 0.00 Construction & Materials – 0.00%; 28.2.2017 (0.03)% Real Estate Investment & Services – 0.00%; 28.2.2017 0.00% Financial Services – (0.01)%; 28.2.2017 0.00% (1,314) Merlin Properties^ 14 – 0.00 944 Aareal Bank 30 (1) (0.01) 98 Azimut^ 2 – 0.00 Software & Computer Services – 0.04%; 28.2.2017 0.00% (341) Dassault Systemes^ 26 – 0.00 32 (1) (0.01) ^ (9) Iliad 2 – 0.00 Fixed Line Telecommunications – 0.00%; 28.2.2017 0.00% ^ (172) Indra Sistemas 2 – 0.00 1,350 Orange^ 18 – 0.00 (3,700) Yoox Net-A-Porter 94 3 0.04 Food & Drug Retailers – 0.00%; 28.2.2017 (0.03)% 124 3 0.04 Food Producers – (0.03)%; 28.2.2017 0.00% Support Services – 0.00%; 28.2.2017 0.00% 3,979 Suedzucker 65 (2) (0.03) (1,647) Bureau Veritas^ 30 – 0.00 (5,659) Caixabank^ 23 – 0.00 Forestry & Paper – (0.06)%; 28.2.2017 0.00% (88) Prosegur Seguridad^ – – 0.00 5,332 UPM-Kymmene 107 (4) (0.06) 53 – 0.00 Gas, Water & Multiutilities – 0.01%; 28.2.2017 0.00% 7,740 E.ON 68 1 0.01 Technology Hardware & Equipment – 0.00%; 28.2.2017 (0.02)% 113 RWE^ 2 – 0.00 (285) Cellnex^ 5 – 0.00 70 1 0.01 Travel & Leisure – 0.01%; 28.2.2017 0.00% (2,832) Accor 102 1 0.01 General Industrials – 0.00%; 28.2.2017 (0.02)% ^ (388) Sodexo 35 – 0.00 General Retailers – 0.00%; 28.2.2017 0.00% 137 1 0.01 148 Fielmann^ 9 – 0.00 CFDs LONG – (0.29)%; 28.2.2017 (0.08)% Healthcare Equipment & Services – 0.01%; 28.2.2017 0.00% 2,062 Amplifon 23 1 0.01 Aerospace & Defense – 0.00%; 28.2.2017 0.02% 41 Fresenius Medical Care^ 3 – 0.00 Automobiles & Parts – 0.00%; 28.2.2017 0.00% 26 1 0.01 80 Rheinmetall^ 6 – 0.00 Industrial Engineering – (0.04)%; 28.2.2017 (0.02)% Banks – 0.00%; 28.2.2017 0.00% 904 Hochtief 124 (3) (0.04) Beverages – 0.00%; 28.2.2017 0.00% 3,239 Valmet^ 47 – 0.00 171 (3) (0.04)

27 BlackRock Investment Funds BlackRock Investment Funds 28 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Industrial Metals & Mining – 0.03%; 28.2.2017 0.00% CFDs LONG – 0.06%; 28.2.2017 0.02% 1,199 Aurubis 83 2 0.03 Banks – 0.00%; 28.2.2017 0.00% 68 Salzgitter^ 2 – 0.00 400 Dah Sing Banking^ 1 – 0.00 85 2 0.03 Electricity – 0.00%; 28.2.2017 0.02% Media – (0.16)%; 28.2.2017 0.02% 3,500 CLP^ 29 – 0.00 10,708 Mediaset Espana 95 (9) (0.13) Financial Services – 0.00%; 28.2.2017 0.00% 2,569 TF1 26 (2) (0.03) 2,000 Haitong International Securities^ 1 – 0.00 121 (11) (0.16) 500 Kerry Logistics Network^ 1 – 0.00 Non-life Insurance – 0.00%; 28.2.2017 (0.02)% 1,000 NWS^ 1 – 0.00 502 ASR Nederland^ 15 – 0.00 3 – 0.00 656 Assicurazioni Generali^ 9 – 0.00 Fixed Line Telecommunications – 0.00%; 28.2.2017 0.00% 24 – 0.00 3,000 HKT Trust & HKT^ 3 – 0.00 Pharmaceuticals & Biotechnology – 0.00%; 28.2.2017 0.02% Food Producers – 0.00%; 28.2.2017 0.00% Real Estate Investment & Services – 0.00%; 28.2.2017 0.00% 3,000 WH^ 2 – 0.00 ^ 495 Immofinanz 1 – 0.00 Personal Goods – 0.00%; 28.2.2017 0.00% Support Services – 0.00%; 28.2.2017 0.00% 4,000 Texwinca^ 2 – 0.00 301 CTS Eventim^ 10 – 0.00 1,000 Yue Yuen Industrial^ 3 – 0.00 Technology Hardware & Equipment – (0.03)%; 28.2.2017 0.03% 5 – 0.00 1,393 BE Semiconductor Industries^ 70 – 0.00 Real Estate Investment & Services – 0.06%; 28.2.2017 0.00% 119 Dialog Semiconductor^ 4 – 0.00 10,000 Hang Lung Properties^ 19 – 0.00 623 Siltronic 46 (2) (0.03) 2,000 Hang Lung^ 6 – 0.00 2,915 STMicroelectronics^ 39 – 0.00 1,000 Hysan Development^ 4 – 0.00 159 (2) (0.03) 8,500 Kerry Properties 26 2 0.03 2,000 Sun Hung Kai Properties 26 2 0.03 FUTURES – (0.07)%; 28.2.2017 (0.04)% 3 CAC40 10 Euro Futures September 2017 141 (1) (0.01) 81 4 0.06 2 DAX Mini Future September 2017 111 (4) (0.06) Technology Hardware & Equipment – 0.00%; 28.2.2017 0.00% 252 (5) (0.07) 100 ASM Pacific Technology^ 1 – 0.00 11,000 FIH Mobile^ 3 – 0.00 HONG KONG DOLLARS – 0.06%; 28.2.2017 0.00% 500 Johnson Electric^ 1 – 0.00 CFDs SHORT – 0.00%; 28.2.2017 (0.02)% 5 – 0.00 General Retailers – 0.00%; 28.2.2017 (0.02)% ISRAELI SHEKEL – 0.00%; 28.2.2017 0.00% Industrial Transportation – 0.00%; 28.2.2017 0.00% JAPANESE YEN – 0.23%; 28.2.2017 (0.15)% (500) Orient Overseas^ 4 – 0.00

Travel & Leisure – 0.00%; 28.2.2017 0.00% (4,000) Cathay Pacific Airways^ 5 – 0.00

29 BlackRock Investment Funds BlackRock Investment Funds 30 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

CFDs SHORT – 0.01%; 28.2.2017 0.03% Food & Drug Retailers – (0.01)%; 28.2.2017 0.05% (1,400) FamilyMart 59 (1) (0.01) Automobiles & Parts – 0.00%; 28.2.2017 0.00% (100) Tsuruha Holdings^ 9 – 0.00 (400) Koito Manufacturing^ 19 – 0.00 (500) Toyo Tire & Rubber^ 7 – 0.00 68 (1) (0.01) ^ (200) Toyota Industries 8 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% 34 – 0.00 (7,000) IHI^ 18 – 0.00 Banks – 0.00%; 28.2.2017 0.00% General Retailers – (0.02)%; 28.2.2017 (0.05)% (500) Concordia Financial^ 2 – 0.00 (2,300) Bic Camera 21 (1) (0.01) (700) Hachijuni Bank^ 3 – 0.00 (100) Izumi^ 4 – 0.00 (10,100) Mizuho Financial^ 13 – 0.00 (3,300) Recruit 51 (1) (0.01) ^ 18 – 0.00 (100) Ryohin Keikaku 21 – 0.00 97 (2) (0.02) Chemicals – 0.06%; 28.2.2017 0.00% (100) Kansai Paint^ 2 – 0.00 Health Care Equipment & Services – (0.01)%; 28.2.2017 0.02% (1,600) Nippon Paint 42 4 0.06 (200) Nihon Kohden^ 4 – 0.00 (100) Toray^ 1 – 0.00 (100) Sysmex^ 5 – 0.00 45 4 0.06 (2,100) Terumo 63 (1) (0.01) 72 (1) (0.01) Construction & Materials – 0.00%; 28.2.2017 (0.03)% (300) Hazama Ando^ 2 – 0.00 Industrial Engineering – 0.00%; 28.2.2017 0.04% (1,000) Kajima^ 7 – 0.00 (400) Ebara^ 10 – 0.00 (1,000) Taiheiyo Cement^ 3 – 0.00 (100) Hoshizaki Electric^ 7 – 0.00 ^ 12 – 0.00 (100) Japan Steel Works 2 – 0.00 (100) Kyudenko^ 3 – 0.00 Electronic & Electrical Equipment – 0.00%; 28.2.2017 0.02% (1,000) Mitsubishi Heavy Industries^ 3 – 0.00 (200) Alps Electric^ 4 – 0.00 25 – 0.00 (400) Furukawa Electric^ 17 – 0.00 (100) Hamamatsu Photonics^ 2 – 0.00 Industrial Metals & Mining – (0.01)%; 28.2.2017 0.00% (100) Hirose Electric^ 11 – 0.00 (900) JFE^ 14 – 0.00 (100) Murata Manufacturing^ 12 – 0.00 (6,000) Mitsui Mining & Smelting 25 (1) (0.01) (200) Nissin Electric^ 2 – 0.00 (500) Nippon Steel & Sumitomo Metal^ 9 – 0.00 (2,300) Taiyo Yuden^ 27 – 0.00 (1,000) Sumitomo Metal Mining^ 13 – 0.00 75 – 0.00 61 (1) (0.01) Financial Services – 0.00%; 28.2.2017 0.00% Industrial Transportation – 0.00%; 28.2.2017 0.00% (700) Acom^ 2 – 0.00 (2,000) Kawasaki Kisen Kaisha^ 4 – 0.00 (900) Aiful^ 2 – 0.00 (7,000) Mitsui O.S.K. Lines^ 17 – 0.00 ^ (100) Hitachi Capital 2 – 0.00 21 – 0.00 (100) Japan Exchange^ 1 – 0.00

7 – 0.00

31 BlackRock Investment Funds BlackRock Investment Funds 32 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Leisure Goods – 0.01%; 28.2.2017 0.00% CFDs LONG – 0.22%; 28.2.2017 (0.16)% (400) Shimano 42 1 0.01 Automobiles & Parts – 0.00%; 28.2.2017 0.00% Media – 0.00%; 28.2.2017 (0.02)% 100 Nissan Shatai^ 1 – 0.00 300 Stanley Electric^ 8 – 0.00 Mobile Telecommunications – 0.00%; 28.2.2017 0.00% 700 Sumitomo Electric^ 8 – 0.00 (100) Softbank^ 6 – 0.00 100 Suzuki Motor^ 4 – 0.00 Personal Goods – 0.00%; 28.2.2017 0.00% 500 Tokai Rika^ 7 – 0.00 (200) ASICS^ 2 – 0.00 100 TS Tech^ 2 – 0.00 (2,100) Shiseido^ 67 – 0.00 30 – 0.00 69 – 0.00 Banks – 0.01%; 28.2.2017 (0.07)% Pharmaceuticals & Biotechnology – 0.00%; 28.2.2017 0.00% 1,000 77 Bank^ 4 – 0.00 (100) Sawai Pharmaceutical^ 4 – 0.00 1,200 Hokuhoku Financial^ 14 – 0.00 (100) Suzuken^ 3 – 0.00 3,600 Sumitomo Mitsui Financial 104 1 0.01 7 – 0.00 122 1 0.01 Real Estate Investment & Services – 0.00%; 28.2.2017 0.00% Beverages – 0.00%; 28.2.2017 0.00% (100) Hulic^ 1 – 0.00 500 Kirin^ 9 – 0.00 Real Estate Investment Trusts – 0.00%; 28.2.2017 0.00% Chemicals – 0.07%; 28.2.2017 (0.02)% (3) Invincible Investment^ 1 – 0.00 1,000 Daicel Chemical^ 10 – 0.00 (1) Orix JREIT^ 1 – 0.00 1,000 Denki Kagaku Kogyo Kabushiki Kaisha^ 5 – 0.00 2 – 0.00 100 Hitachi Chemical^ 2 – 0.00 400 JSR 6 1 0.02 Software & Computer Services – (0.01)%; 28.2.2017 0.00% 5,200 Mitsubishi Chemical 37 2 0.03 (200) CyberAgent^ 5 – 0.00 2,000 Mitsui Chemicals^ 9 – 0.00 (200) Oracle Japan 11 (1) (0.01) 1,200 Nagase^ 15 – 0.00 16 (1) (0.01) 1,000 Nippon Kayaku 12 1 0.01 ^ Technology Hardware & Equipment – 0.00%; 28.2.2017 0.00% 100 Nissan Chemical Industries 3 – 0.00 ^ (2,000) NEC^ 4 – 0.00 100 Nitto Denko 7 – 0.00 ^ (8,300) Ricoh^ 64 – 0.00 1,000 Teijin 16 – 0.00 1,500 Tokai Carbon 8 1 0.01 68 – 0.00 1,000 Zeon^ 10 – 0.00 Travel & Leisure – 0.00%; 28.2.2017 0.00% 140 5 0.07 (100) HIS^ 3 – 0.00 (1,000) McDonald’s^ 34 – 0.00 Construction & Materials – 0.02%; 28.2.2017 0.00% (100) Oriental Land^ 6 – 0.00 600 Daito Trust Construction 82 2 0.03 5,000 Nishimatsu Construction 21 (1) (0.01) 43 – 0.00 2,500 Penta-Ocean Construction^ 12 – 0.00 115 1 0.02

33 BlackRock Investment Funds BlackRock Investment Funds 34 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Electricity – 0.00%; 28.2.2017 0.00% Industrial Transportation – 0.00%; 28.2.2017 0.00% 200 Kyushu Electric Power^ 2 – 0.00 100 Hitachi Transport System^ 2 – 0.00 800 Shikoku Electric Power^ 8 – 0.00 1,000 Mitsubishi Logistics^ 9 – 0.00 ^ 10 – 0.00 1,000 Sankyu 6 – 0.00 17 – 0.00 Electronic & Electrical Equipment – 0.00%; 28.2.2017 (0.03)% Life Insurance – 0.00%; 28.2.2017 0.00% Financial Services – 0.00%; 28.2.2017 0.00% 100 Dai-ichi Life^ 1 – 0.00 4,800 Iida^ 63 – 0.00 1,400 T&D^ 15 – 0.00 800 Japan Display^ 1 – 0.00 16 – 0.00 64 – 0.00 Media – 0.00%; 28.2.2017 0.00% Food & Drug Retailers – 0.00%; 28.2.2017 0.00% 1,000 Dai Nippon Printing^ 9 – 0.00 Food Producers – 0.00%; 28.2.2017 (0.02)% Mobile Telecommunications – 0.00%; 28.2.2017 0.00% 100 Nisshin Seifun^ 1 – 0.00 4,800 NTT Docomo^ 86 – 0.00 Fixed Line Telecommunications – 0.03%; 28.2.2017 0.00% Oil & Gas Producers – 0.00%; 28.2.2017 0.00% 1,600 Nippon Telegraph & Telephone 61 2 0.03 2,550 JX^ 10 – 0.00

Personal Goods – 0.00%; 28.2.2017 0.00% Gas, Water & Multiutilities – 0.00%; 28.2.2017 0.00% 200 Lion^ 3 – 0.00 2,000 Toho Gas^ 10 – 0.00 200 Pigeon^ 6 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% 100 Pola Orbis^ 2 – 0.00 100 Toyo Seikan^ 1 – 0.00 11 – 0.00 General Retailers – 0.00%; 28.2.2017 0.00% Pharmaceuticals & Biotechnology – 0.06%; 28.2.2017 0.00% 200 Adastria^ 3 – 0.00 11,900 Astellas Pharma^ 116 – 0.00 100 H2O Retailing^ 1 – 0.00 1,700 Daiichi Sankyo 31 4 0.06 500 J Front Retailing^ 5 – 0.00 100 Miraca^ 4 – 0.00 300 Kakaku.com^ 3 – 0.00 600 Sumitomo Dainippon^ 6 – 0.00 100 Komeri^ 2 – 0.00 300 Yamada Denki^ 1 – 0.00 157 4 0.06 15 – 0.00 Real Estate Investment & Services – 0.01%; 28.2.2017 (0.02)% 1,000 Sumitomo Realty & Development 23 1 0.01 Household Goods & Home Construction – 0.00%; 28.2.2017 0.00% 200 Sekisui House^ 3 – 0.00 Real Estate Investment Trusts – 0.00%; 28.2.2017 0.00% 6 Japan Prime Realty Investment^ 17 – 0.00 Industrial Engineering – 0.00%; 28.2.2017 0.00% 1 Nippon Building Fund^ 4 – 0.00 2,000 Chiyoda^ 8 – 0.00 21 – 0.00 Industrial Metals & Mining – 0.00%; 28.2.2017 0.00% 1,000 Dowa Mining^ 6 – 0.00 Software & Computer Services – 0.00%; 28.2.2017 0.00% 200 Itochu Techno-Solutions^ 6 – 0.00 200 NS Solutions^ 3 – 0.00 9 – 0.00

35 BlackRock Investment Funds BlackRock Investment Funds 36 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Support Services – 0.01%; 28.2.2017 0.00% SWEDISH KRONE – 0.02%; 28.2.2017 0.04% 100 Glory^ 3 – 0.00 CFDs SHORT – 0.03%; 28.2.2017 0.02% 600 Marubeni^ 3 – 0.00 1,100 Secom 63 1 0.01 Banks – 0.00%; 28.2.2017 0.02% 69 1 0.01 Construction & Materials – 0.00%; 28.2.2017 0.00% (352) Nibe Industrier^ 3 – 0.00 Technology Hardware & Equipment – 0.01%; 28.2.2017 0.00% 300 Tokyo Electron 33 1 0.01 Electronic & Electrical Equipment – 0.00%; 28.2.2017 0.00% (547) Hexagon series ‘B’ shares^ 21 – 0.00 Travel & Leisure – 0.00%; 28.2.2017 0.00% 100 West Japan Railway^ 6 – 0.00 Healthcare Equipment & Services – 0.00%; 28.2.2017 0.00% (150) Getinge^ 2 – 0.00 FUTURES – 0.00%; 28.2.2017 (0.02)% 18 Mini TPX Index Futures September 2017^ 205 – 0.00 Industrial Engineering – 0.00%; 28.2.2017 0.00% (141) Alfa Laval^ 2 – 0.00 NORWEGIAN KRONE – 0.03%; 28.2.2017 0.00% Technology Hardware & Equipment – 0.03%; 28.2.2017 0.00% CFDs SHORT – 0.00%; 28.2.2017 0.02% (10,462) Ericsson series ‘B’ shares 47 2 0.03 Aerospace & Defence – 0.00%; 28.2.2017 0.02% CFDs LONG – (0.01)%; 28.2.2017 0.02% CFDs LONG – 0.03%; 28.2.2017 (0.02)% Construction & Materials – 0.00%; 28.2.2017 0.00% Food Producers – 0.00%; 28.2.2017 (0.02)% 211 NCC ‘B’^ 4 – 0.00 1,547 Leroy Seafood^ 8 – 0.00 Financial Services – 0.00%; 28.2.2017 0.02% Industrial Metals & Mining – 0.03%; 28.2.2017 0.00% Industrial Engineering – 0.00%; 28.2.2017 0.00% 5,729 Norsk Hydro 32 2 0.03 150 Volvo series ‘B’ shares^ 2 – 0.00 Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 0.00% Mining – 0.00%; 28.2.2017 0.00% 93 TGS Nopec Geophysical^ 2 – 0.00 377 Boliden^ 10 – 0.00 SINGAPORE DOLLAR – (0.01)%; 28.2.2017 0.05% Real Estate Investment & Services – (0.01)%; 28.2.2017 0.00% CFDs SHORT – (0.01)%; 28.2.2017 0.00% 331 JM 8 (1) (0.01) Gas, Water & Multiutilities – 0.00%; 28.2.2017 0.00% Travel & Leisure – 0.00%; 28.2.2017 0.00% (10,500) Sembcorp Industries^ 18 – 0.00 83 Kindred^ 1 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% SWISS FRANCS – 0.01%; 28.2.2017 0.11% (5,200) Noble^ 1 – 0.00 CFDs SHORT – 0.00%; 28.2.2017 0.09% Real Estate Investment & Services – 0.00%; 28.2.2017 0.00% Banks – 0.00%; 28.2.2017 0.00% (1,200) City Developments^ 8 – 0.00 (766) Credit Suisse^ 9 – 0.00 Industrial Transportation – (0.01)%; 28.2.2017 0.00% Food Producers – 0.00%; 28.2.2017 0.00% (54,147) Singapore Post 39 (1) (0.01) (255) Aryzta^ 6 – 0.00 CFDs LONG – 0.00%; 28.2.2017 0.05%

Electronic & Electrical Equipment – 0.00%; 28.2.2017 0.05%

37 BlackRock Investment Funds BlackRock Investment Funds 38 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

General Retailers – 0.01%; 28.2.2017 0.04% Health Care Equipment & Services – 0.00%; 28.2.2017 0.00% (405) Dufry 48 1 0.01 (1,670) Al Noor Hospitals^ 13 – 0.00 (208) Swatch class ‘N’ shares^ 12 – 0.00 (506) ConvaTec^ 1 – 0.00 60 1 0.01 14 – 0.00 Personal Goods – 0.00%; 28.2.2017 0.05% Media – 0.01%; 28.2.2017 0.00% (10,800) Daily Mail & General Trust^ 67 – 0.00 Technology Hardware & Equipment – (0.01)%; 28.2.2017 0.00% (5,481) Informa 37 1 0.01 (455) AMS 25 (1) (0.01) 104 1 0.01 CFDs LONG – 0.01%; 28.2.2017 0.02% Mining – 0.00%; 28.2.2017 0.07% Financial Services – 0.00%; 28.2.2017 0.00% 367 GAM^ 4 – 0.00 Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 0.04% Health Care Equipment & Services – 0.00%; 28.2.2017 0.02% Pharmaceuticals & Biotechnology – 0.00%; 28.2.2017 (0.05)% (358) Hikma Pharmaceuticals^ 4 – 0.00 Industrial Engineering – 0.00%; 28.2.2017 0.00% 4 Georg Fischer^ 4 – 0.00 Real Estate Investment & Services – 0.00%; 28.2.2017 0.02% Software & Computer Services – 0.01%; 28.2.2017 0.00% Real Estate Investment Trusts – 0.00%; 28.2.2017 0.00% 674 Temenos 51 1 0.01 (259) Segro^ 1 – 0.00 Technology Hardware & Equipment – 0.00%; 28.2.2017 0.00% Software & Computer Services – 0.00%; 28.2.2017 0.00% 2,871 Logitech International^ 79 – 0.00 (4,268) Micro Focus International^ 98 – 0.00 UNITED KINGDOM STERLING – 0.15%; 28.2.2017 0.04% Support Services – 0.00%; 28.2.2017 0.00% (2,943) Capita^ 19 – 0.00 CFDs SHORT – 0.10%; 28.2.2017 0.04% Travel & Leisure – 0.00%; 28.2.2017 0.00% Aerospace & Defense – 0.01%; 28.2.2017 (0.09)% (1,053) GVC^ 8 – 0.00 (75,130) Cobham 102 1 0.01 CFDs LONG – 0.05%; 28.2.2017 0.00% Banks – 0.00%; 28.2.2017 0.05% (5,486) Royal Bank of Scotland^ 14 – 0.00 Aerospace & Defense – 0.01%; 28.2.2017 0.02% 1,948 QinetiQ 4 1 0.01 Construction & Materials – 0.03%; 28.2.2017 0.00% (11,364) Balfour Beatty 30 2 0.03 Beverages – 0.03%; 28.2.2017 0.02% (3,873) Melrose Industries^ 9 – 0.00 608 Diageo^ 16 – 0.00 4,139 Fever-Tree Drinks 102 2 0.03 39 2 0.03 118 2 0.03 Food Producers – 0.04%; 28.2.2017 0.00% (18,890) Greencore 38 3 0.04 Electricity – 0.00%; 28.2.2017 0.00% 230 Drax^ 1 – 0.00 General Retailers – 0.01%; 28.2.2017 0.00% (1,030) Next 42 1 0.01 Food & Drug Retailers – 0.00%; 28.2.2017 (0.02)% 8,698 Wm Morrison Supermarkets^ 21 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% (992) RPC^ 9 – 0.00 Food Producers – 0.01%; 28.2.2017 0.00% 887 Associated British Foods 29 1 0.01

39 BlackRock Investment Funds BlackRock Investment Funds 40 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Financial Services – 0.00%; 28.2.2017 0.00% UNITED STATES DOLLARS – 0.06%; 28.2.2017 0.36% 2,089 Close Brothers^ 32 – 0.00 CFDs SHORT – (0.15)%; 28.2.2017 (0.08)% 944 Hargreaves Lansdown^ 13 – 0.00 4,227 Jupiter Fund Management^ 22 – 0.00 Aerospace & Defense – 0.00%; 28.2.2017 0.00% 111 Schroders^ 4 – 0.00 (18) Rockwell Collins^ 2 – 0.00 (510) Transdigm^ 110 – 0.00 71 – 0.00 112 – 0.00 Gas, Water & Multiutilities – 0.00%; 28.2.2017 0.00% Alternative Energy – 0.00%; 28.2.2017 (0.03)% General Retailers – (0.01)%; 28.2.2017 0.00% 907 boohoo.com^ 2 – 0.00 Automobiles & Parts – (0.01)%; 28.2.2017 0.02% 5,779 Inchcape 48 (1) (0.01) (318) Adient^ 17 – 0.00 (1,063) Ford Motor^ 9 – 0.00 50 (1) (0.01) (2,805) General Motors 78 (1) (0.01) General Industrials – 0.00%; 28.2.2017 0.00% (144) Goodyear Tire & Rubber^ 3 – 0.00 953 DS Smith^ 5 – 0.00 (82) LKQ^ 2 – 0.00 657 Smiths^ 10 – 0.00 109 (1) (0.01) 15 – 0.00 Banks – 0.04%; 28.2.2017 0.00% Household Goods & Home Construction – 0.00%; 28.2.2017 (0.02)% (24) Hancock^ 1 – 0.00 Industrial Engineering – 0.01%; 28.2.2017 0.02% (455) M&T Bank 53 1 0.01 753 Bodycote^ 7 – 0.00 (2,557) Wells Fargo 102 2 0.03 1,520 Spirax-Sarco Engineering 86 1 0.01 156 3 0.04 93 1 0.01 Beverages – 0.00%; 28.2.2017 0.04% Industrial Transportation – 0.00%; 28.2.2017 0.00% Chemicals – 0.03%; 28.2.2017 0.09% 2,882 Royal Mail^ 11 – 0.00 (4,413) CF Industries 99 3 0.04 ^ Media – 0.00%; 28.2.2017 (0.02)% (120) Chemours 4 – 0.00 (671) FMC^ 44 – 0.00 Support Services – 0.00%; 28.2.2017 0.00% (519) Olin 13 (1) (0.01) 5,870 Electrocomponents^ 37 – 0.00 160 2 0.03 2,499 Michael Page International^ 12 – 0.00 49 – 0.00 Construction & Materials – 0.00%; 28.2.2017 0.00% (334) Sherwin-Williams^ 88 – 0.00 Travel & Leisure – 0.00%; 28.2.2017 0.00% 663 Carnival^ 36 – 0.00 Electricity – 0.00%; 28.2.2017 0.00% ^ 3,004 SSP^ 16 – 0.00 (662) FirstEnergy 17 – 0.00 100,740 Thomas Cook 125 1 0.01 Electronic & Electrical Equipment – (0.08)%; 28.2.2017 0.00% 2,516 TUI 33 (1) (0.01) (19) Coherent^ 3 – 0.00 210 – 0.00 (1,564) MACOM Technology Solutions 55 (5) (0.07) (108) Universal Display 10 (1) (0.01) FUTURES – 0.00%; 28.2.2017 0.00% 1 FTSE 100 Index Futures September 2017^ 74 – 0.00 68 (6) (0.08)

41 BlackRock Investment Funds BlackRock Investment Funds 42 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Financial Services – (0.04)%; 28.2.2017 (0.07)% (143) Integra LifeSciences^ 6 – 0.00 (103) Alliance Data Systems^ 18 – 0.00 (133) Laboratory Corporation of America^ 16 – 0.00 (3,543) Ally Financial^ 61 – 0.00 (64) Molina Healthcare^ 3 – 0.00 (1,885) CIT^ 66 – 0.00 (790) Nevro^ 53 – 0.00 (529) Credit Acceptance 111 (3) (0.04) (127) NuVasive 6 1 0.02 (127) EllieMAe^ 8 – 0.00 (204) Penumbra^ 13 – 0.00 (443) Gramercy Property^ 10 – 0.00 (414) Universal Health Services class ‘B’ shares 34 1 0.01 (298) Interactive Broker^ 10 – 0.00 (1,259) Zimmer 110 1 0.01 ^ (78) Virtu Financial 1 – 0.00 301 3 0.04 285 (3) (0.04) Household Goods & Home Construction – 0.00%; 28.2.2017 (0.05)% Fixed Line Telecommunications – 0.00%; 28.2.2017 (0.02)% Industrial Engineering – 0.00%; 28.2.2017 0.03% (1,829) Commscope^ 47 – 0.00 (18) Navistar International^ – – 0.00 Food & Drug Retailers – 0.00%; 28.2.2017 0.00% Leisure Goods – 0.00%; 28.2.2017 0.00% (1,802) Rite Aid^ 3 – 0.00 (69) Mattel^ 1 – 0.00 Food Producers – 0.03%; 28.2.2017 0.00% Media – (0.01)%; 28.2.2017 0.02% (132) B&G Foods^ 3 – 0.00 (2,247) DISH Network class ‘A’ shares 100 1 0.02 (783) Snyders-Lance 22 1 0.01 (395) Liberty Broadband class ‘C’ shares^ 31 – 0.00 (382) Treehouse Foods 20 1 0.02 (2,579) Zillow 79 (2) (0.03) 45 2 0.03 210 (1) (0.01) Gas, Water & Multiutilities – 0.00%; 28.2.2017 0.00% Mining – 0.00%; 28.2.2017 0.00% (81) New Jersey Resourc^ 3 – 0.00 (111) US Silica^ 2 – 0.00 General Industrials – 0.00%; 28.2.2017 0.00% Non-life Insurance – 0.01%; 28.2.2017 0.01% (3,563) Ball^ 109 – 0.00 (44) Loews^ 2 – 0.00 (101) Berry Global^ 4 – 0.00 (5,760) Radian^ 77 – 0.00 113 – 0.00 (748) Willis Towers Watson 86 1 0.01 General Retailers – (0.03)%; 28.2.2017 0.02% 165 1 0.01 (28) Cabela’s^ 1 – 0.00 Oil & Gas Producers – 0.01%; 28.2.2017 (0.02)% (455) Dollar Tree 28 (2) (0.03) (8,104) Callon Petroleum 63 1 0.01 (284) O’Reilly Automotive^ 44 – 0.00 (1,396) Centennial Resource Development^ 18 – 0.00 (225) Sally Beauty Holdings^ 3 – 0.00 (97) Pioneer Natural Resources^ 10 – 0.00 76 (2) (0.03) 91 1 0.01 Health Care Equipment & Services – 0.04%; 28.2.2017 (0.03)% Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 0.00% (27) Bio-Rad Laboratories^ 5 – 0.00 (6,357) Weatherford International^ 19 – 0.00 (289) Dexcom^ 17 – 0.00 (519) Envision Healthcare^ 21 – 0.00 Personal Goods – 0.00%; 28.2.2017 0.00% (90) ICU Medical^ 12 – 0.00 (273) Coty^ 4 – 0.00 (114) Insulet^ 5 – 0.00

43 BlackRock Investment Funds BlackRock Investment Funds 44 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Pharmaceuticals & Biotechnology – (0.02)%; 28.2.2017 (0.05)% Support Services – 0.02%; 28.2.2017 0.00% (2,884) Abbott Laboratories 112 (1) (0.01) (164) HD Supply^ 4 – 0.00 (381) Allergan^ 66 – 0.00 (3,594) Johnson Controls International 109 (1) (0.01) (5) Bio-Techne^ – – 0.00 (1,535) Verisk Analytics 96 2 0.03 ^ (88) Illumina 14 – 0.00 209 1 0.02 (24) INC Research^ 1 – 0.00 (104) Mallinckrodt Pharmaceuticals^ 3 – 0.00 Technology Hardware & Equipment – (0.04)%; 28.2.2017 0.00% (39) Nektar Therapeutics^ 1 – 0.00 (2,214) Advanced Micro Devices 22 (1) (0.01) ^ (210) Quintiles Transnational^ 16 – 0.00 (138) Cree 3 – 0.00 (1,347) The Medicines Company 38 (1) (0.01) (788) Lumentum 35 (2) (0.03) (51) Qorvo^ 3 – 0.00 251 (2) (0.02) (10) Western Digital^ 1 – 0.00 Real Estate Investment & Services – 0.00%; 28.2.2017 0.00% 64 (3) (0.04) (378) Colony Northstar^ 4 – 0.00 Travel & Leisure – (0.03)%; 28.2.2017 0.04% Real Estate Investment Trusts – (0.07)%; 28.2.2017 (0.09)% (361) Allegiant Travel^ 33 – 0.00 ^ (2,095) Cousins Properties 15 – 0.00 (668) Interval Leisure^ 14 – 0.00 ^ (634) Education Realty Trust 19 – 0.00 (4,358) MGM Resorts International 109 (2) (0.03) (111) Empire State Realty^ 2 – 0.00 156 (2) (0.03) (300) Equinix 108 (3) (0.04) (1,418) Extra Space Storage 85 (2) (0.03) CFDs LONG – 0.17%; 28.2.2017 0.34% (333) GEO^ 7 – 0.00 Automobiles & Parts – 0.01%; 28.2.2017 0.00% (92) Healthcare Realty Trust^ 2 – 0.00 303 Gentex^ 4 – 0.00 (234) Howard Hughes^ 21 – 0.00 1,052 Tenneco 44 1 0.01 ^ (50) Iron Mountain 2 – 0.00 48 1 0.01 (94) Life Storage^ 5 – 0.00 (187) Medical Properties Trust^ 2 – 0.00 Banks – 0.00%; 28.2.2017 0.00% ^ (3,316) Physicians Realty Trust 47 (1) (0.01) 154 Citizens Financial 4 – 0.00 ^ (70) Regency Centers^ 3 – 0.00 309 First Horizon National 4 – 0.00 (37) Senior Housing Properties Trust^ 1 – 0.00 8 – 0.00 (571) Starwood Waypoint Homes^ 16 – 0.00 Chemicals – 0.03%; 28.2.2017 0.00% (74) Taubman Centers^ 3 – 0.00 368 Air Products & Chemicals^ 42 – 0.00 (995) Uniti^ 15 – 0.00 1,667 Cabot 68 1 0.02 (5,314) VEREIT 35 1 0.01 729 Lyondellbasell Industries class ‘A’ shares 51 1 0.01 (278) WP Carey^ 15 – 0.00 161 2 0.03 403 (5) (0.07) Construction & Materials – (0.01)%; 28.2.2017 0.00% Software & Computer Services – 0.00%; 28.2.2017 0.01% 379 Fluor^ 11 – 0.00 (56) Athenahealth^ 6 – 0.00 886 Illinois Tool Works 94 (1) (0.01) (83) PTC^ 4 – 0.00 838 Masco^ 24 – 0.00 (37) TiVo^ 1 – 0.00 160 Owens Corning^ 9 – 0.00 11 – 0.00 138 (1) (0.01)

45 BlackRock Investment Funds BlackRock Investment Funds 46 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Electricity – 0.00%; 28.2.2017 0.00% Health Care Equipment & Services – 0.00%; 28.2.2017 0.06% 3,154 Westar Energy^ 126 – 0.00 254 Baxter International^ 12 – 0.00 124 Edwards Lifesciences^ 11 – 0.00 Financial Services – 0.00%; 28.2.2017 0.02% 644 Humana 127 1 0.01 53 Ameriprise Financial^ 6 – 0.00 142 Idexx Laboratories^ 17 – 0.00 1,231 CME^ 121 – 0.00 530 Masimo 34 (1) (0.01) 553 Eaton Vance^ 20 – 0.00 276 Quest Diagnostics^ 23 – 0.00 321 MasterCard class ‘A’ shares^ 33 – 0.00 358 S&P Global^ 43 – 0.00 224 – 0.00 ^ 1,545 Visa 125 – 0.00 Household Goods & Home Construction – 0.00%; 28.2.2017 0.00% ^ 550 Western Union 8 – 0.00 174 Snap-on^ 20 – 0.00 356 – 0.00 Industrial Engineering – 0.03%; 28.2.2017 0.00% Food & Drug Retailers – 0.00%; 28.2.2017 0.00% 170 Allison Transmission^ 5 – 0.00 226 Kroger^ 4 – 0.00 271 Aspen Technology 13 1 0.01 136 McKesson^ 15 – 0.00 152 Colfax^ 5 – 0.00 501 Sprouts Farmers Market^ 8 – 0.00 74 GATX^ 3 – 0.00 ^ 27 – 0.00 339 Ingersoll–Rand 23 – 0.00 35 Kennametal^ 1 – 0.00 Food Producers – (0.03)%; 28.2.2017 0.02% 15 Lincoln Electric^ 1 – 0.00 ^ 572 Archer Daniels Midland 19 – 0.00 480 Paccar 25 1 0.02 695 Campbell Soup 27 (2) (0.03) 294 Parker-Hannifin^ 37 – 0.00 ^ 351 Pilgrim’s Pride 8 – 0.00 89 Rockwell Automation^ 11 – 0.00 54 (2) (0.03) 124 2 0.03 Gas, Water & Multiutilities – 0.00%; 28.2.2017 0.02% Industrial Metals & Mining – 0.00%; 28.2.2017 0.00% ^ 106 Vectren 5 – 0.00 199 Nucor^ 9 – 0.00 General Retailers – (0.10)%; 28.2.2017 0.06% Industrial Transportation – 0.03%; 28.2.2017 0.02% 1,113 American Eagle Outfitters 11 1 0.02 33 FedEx^ 5 – 0.00 ^ 199 Best Buy 8 – 0.00 431 Landstar Systems 31 3 0.04 1,606 Big Lots 59 (4) (0.06) 1,508 Union Pacific 123 (1) (0.01) 42 Burlington Stores^ 3 – 0.00 159 2 0.03 8 Chemed^ 1 – 0.00 728 Costco Wholesale 87 (2) (0.03) Life Insurance – (0.01)%; 28.2.2017 0.00% 98 Foot Locker^ 3 – 0.00 950 Lincoln National 50 (1) (0.01) 90 GameStop^ 1 – 0.00 997 Principal Financial^ 48 – 0.00 118 H&R Block^ 2 – 0.00 235 Prudential Financial^ 19 – 0.00 ^ 1,369 Hasbro 101 – 0.00 117 (1) (0.01) 510 Kar Auction Services^ 18 – 0.00 163 Ross Stores^ 7 – 0.00 1,590 Target 67 (2) (0.03) 1,554 TJX 87 1 0.01 2,063 Wal-Mart Stores 126 (1) (0.01) 581 (7) (0.10)

47 BlackRock Investment Funds BlackRock Investment Funds 48 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Media – (0.03)%; 28.2.2017 0.00% Software & Computer Services – 0.13%; 28.2.2017 0.00% 2,259 Interpublic 35 (2) (0.03) 99 Adobe Systems^ 12 – 0.00 364 Liberty Media^ 12 – 0.00 374 Fortinet^ 11 – 0.00 559 Liberty SiriusXM^ 19 – 0.00 419 Manhattan Associates^ 14 – 0.00 198 Meredith Corp^ 8 – 0.00 1,604 NetApp 48 (2) (0.03) 55 Omnicom^ 3 – 0.00 299 Veeva Systems^ 13 – 0.00 77 (2) (0.03) 1,571 VeriSign 125 3 0.04 1,374 VMware 114 8 0.12 Mining – 0.01%; 28.2.2017 (0.02)% 1,689 Zynga^ 5 – 0.00 735 Newmont Mining 22 1 0.01 342 9 0.13 Oil & Gas Producers – 0.00%; 28.2.2017 (0.02)% Support Services – 0.00%; 28.2.2017 0.02% 834 Newfield Exploration^ 17 – 0.00 83 Broadridge Financial Solutions^ 5 – 0.00 Oil Equipment, Services & Distribution – 0.00%; 28.2.2017 0.03% 45 Euronet Worldwide^ 3 – 0.00 ^ Personal Goods – 0.03%; 28.2.2017 0.05% 297 Manpower 25 – 0.00 ^ 259 Carter’s^ 17 – 0.00 890 Robert Half International 31 – 0.00 ^ 449 Estee Lauder class ‘A’ shares 37 1 0.01 578 WageWorks 26 – 0.00 1,375 Kohl’s 42 2 0.03 90 – 0.00 1,146 Lowe’s 66 (2) (0.03) Technology Hardware & Equipment – 0.04%; 28.2.2017 0.03% 840 Ralph Lauren class ‘A’ shares 57 1 0.02 133 Garmin^ 5 – 0.00 44 Wolverine World Wide^ 1 – 0.00 745 Interdigital^ 41 – 0.00 220 2 0.03 131 Juniper Networks^ 3 – 0.00 ^ Pharmaceuticals & Biotechnology – 0.00%; 28.2.2017 0.00% 131 Lam Research 17 – 0.00 86 AmerisourceBergen^ 5 – 0.00 1,930 NCR 54 1 0.02 ^ 46 Eastman Chemical^ 3 – 0.00 238 Pitney Bowes 2 – 0.00 951 Texas Instruments 61 1 0.02 8 – 0.00 183 2 0.04 Real Estate Investment & Services – 0.00%; 28.2.2017 0.03% Travel & Leisure – 0.04%; 28.2.2017 0.00% Real Estate Investment Trusts – 0.00%; 28.2.2017 0.02% 1,278 Carnival 68 1 0.02 ^ 312 Host Hotels & Resorts 4 – 0.00 54 Darden Restaurants^ 3 – 0.00 ^ 36 Outfront Media 1 – 0.00 1,014 McDonald’s 126 1 0.02 ^ 1,269 RLJ Lodging Trust 20 – 0.00 185 Royal Caribbean Cruises^ 17 – 0.00 25 – 0.00 252 Starbucks^ 11 – 0.00 225 2 0.04

49 BlackRock Investment Funds BlackRock Investment Funds 50 BlackRock Global Long/Short Equity Fund BlackRock Global Long/Short Equity Fund

Portfolio Statement (unaudited) continued Statement of Total Return (unaudited) for the six months ended 31 August 2017

Holding or Market % of For the period Nominal Value Total Net from 1.10.2015 Value Investment £000’s Assets 31.8.2017 to 31.8.2016 £000’s £000’s £000’s £000’s FUTURES – 0.04%; 28.2.2017 0.10% 5 S&P500 E-mini Futures September 2017 3 0.04 Income Net capital gains/(losses) 384 (519) Portfolio of investments 5,776 85.49 Revenue 94 53 Net other assets 980 14.51 Expenses (1) (24) Total net assets 6,756 100.00 Interest payable and similar charges (75) (40) Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market. The Contracts for Differences (CFDs) shown in the portfolio statement on pages 21 to 50 are expressed at both their mark-to-market and original notional value, Net revenue/(expense) before taxation 18 (11) which when added together represent the current notional value of the CFDs. Taxation – – The current notional value of a CFD represents the reference amount used to calculate payments between the counterparties to the CFD. The full notional value represents the economic interest in the security underlying the CFD, but does not change hands in full between the counterparties. Net revenue/(expense) after taxation 18 (11) ^ Investments less than £500 are rounded to zero. Total return before distributions 402 (530) Distributions (16) (5) Change in net assets attributable to unitholders from investment activities 386 (535)

Statement of Change in Net Assets Attributable to Unitholders (unaudited) for the six months ended 31 August 2017

For the period from 1.10.2015 31.8.2017 to 31.8.2016 £000’s £000’s £000’s £000’s

Opening net assets attributable to unitholders 6,354 – Amounts receivable on issue of units – 13,195 Amounts payable on cancellation of units – (6,618) – 6,577 Change in net assets attributable to unitholders from investment activities 386 (535) Retained distribution on accumulation units 16 4 Closing net assets attributable to unitholders 6,756 6,046

The above statement shows the comparative closing net assets at 31 August 2016 whereas the current accounting period commenced 1 March 2017.

51 BlackRock Investment Funds BlackRock Investment Funds 52 BlackRock Global Long/Short Equity Fund BlackRock Sterling Strategic Bond Fund

Balance Sheet (unaudited) About the Fund at 31 August 2017 The Fund is a sub-fund of BlackRock Investment Funds, a UCITS scheme under the COLL Sourcebook. The Fund was authorised by the FCA on 14 April 2016 and was established on 17 May 2016. 31.8.2017 28.2.2017 £000’s £000’s Assets: Investment Objective & Policy Fixed assets – Investment assets 5,884 5,664 The Fund aims to generate income returns with the prospect of capital growth through an actively managed portfolio of predominantly fixed income securities. Current assets – Debtors 196 5 The Fund will invest mainly in a range of sterling denominated investment grade non-government fixed income – Cash and bank balances 842 828 securities. However, the full spectrum of available securities, including non-investment grade, emerging market and government fixed income securities, may be utilised. Exposure to non sterling denominated assets Total assets 6,922 6,497 will typically be hedged back to sterling. Separately, the Fund may also invest in equity securities, collective Liabilities: investment schemes, cash, near cash and deposits. Investment liabilities (108) (89) The Fund may also invest in derivatives and forward transactions for investment purposes as well as for Creditors efficient portfolio management (including, but not limited to, forward currency transactions, futures, credit – Bank overdrafts (2) (20) default swaps, credit default swap indices and interest rate swaps). – Amounts held at futures clearing houses and brokers – (8) – Cash collateral payable – (2) – Other creditors (56) (24) Total liabilities (166) (143) Net assets attributable to unitholders 6,756 6,354

G D Bamping (Director) M T Zemek (Director) BlackRock Fund Managers Limited 17 October 2017

53 BlackRock Investment Funds BlackRock Investment Funds 54 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Risk and Reward Profile Performance Table

Lower risk Higher risk For the six months§ Typically lower rewards Typically higher rewards to 31.8.2017 Unit Class TOTAL RETURN (with net income reinvested) A Income 1 2 3 4 5 6 7 Class D Accumulation Units

A Accumulation 1 2 3 4 5 6 7 BlackRock Sterling Strategic Bond Fund +3.6% X Income 1 2 3 4 5 6 7 IA Sterling Strategic Bond Sector Average† +2.9%

X Accumulation 1 2 3 4 5 6 7 All Fund figures quoted are based on bid-to-bid prices (the price at which units are sold) and are calculated net of fees. Performance returns are cumulative. All returns are in Sterling. D Income 1 2 3 4 5 6 7 § Three and five year performance data does not exist as the Fund launched in May 2016. † The Fund’s performance is not measured in reference to a benchmark index. For purely reference purposes we are showing the IA Sterling Strategic Bond Sector Average as D Accumulation 1 2 3 4 5 6 7 an indicator of the Fund’s relative performance. Z Income 1 2 3 4 5 6 7 Z Accumulation 1 2 3 4 5 6 7 All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and the return of your initial investment amount cannot be guaranteed. Changes in exchange rates may cause the value of an investment to fluctuate. Past performance is not a guide to future performance • The risk indicator was calculated incorporating simulated historical data and may not be a reliable and should not be the sole factor of consideration when selecting a product. indication of the future risk profile of the Fund. • The risk category shown is not guaranteed and may change over time. • The lowest category does not mean risk free. • The use of derivatives will impact the value of the Fund and may expose the Fund to a higher degree of risk. Derivatives are highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. The impact to the Fund can be greater where derivatives are used in an extensive or complex way.

For more information on this, please see the Fund’s Key Investor Information Documents (“KIIDs”), which are available at www.blackrock.com.

55 BlackRock Investment Funds BlackRock Investment Funds 56 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Classification of Investments Investment Report

The following charts provide an analysis of the portfolio weightings as at 31 August 2017 and 28 February 2017 Summary of Performance over the Period by their respective asset types. The Fund rose by 3.6%* over the period from 1 March 2017 to 31 August 2017.

The Fund is not managed in reference to an index. For purely reference purposes, the IA Sterling Strategic Bond Sector Average, returned 2.9%, over the same period. 31 August 2017 Fund Manager’s Commentary UK Sterling Denominated Fixed Rate Corporate Bonds 69.04%  Over the period, investors recovered quickly from global events, including the launch of the UK’s process  UK Sterling Denominated Fixed Rate Government Bonds 0.57% to leave the European Union (“EU”), anti-EU political candidates and US tensions with North Korea. In the  UK Sterling Denominated Variable Rate Corporate Bonds 10.06% US, the controversies of the Trump administration made investors less optimistic that the President would  Euro Denominated Fixed Rate Corporate Bonds 5.14% be able to enact his pro-business agenda. The US Federal Reserve (“Fed”) took steps towards unwinding  Euro Denominated Fixed Rate Government Bonds 5.32% its programmes put in place to stimulate economic growth. Meanwhile, analysts speculated about when the  US Dollar Denominated Fixed Rate Corporate Bonds 7.98% European Central Bank (“ECB”) would begin to scale back its own stimulus measures. Overall, bond yields  US Dollar Denominated Variable Rate Corporate Bonds 1.06% were low, which helped to support share-market outperformance, as investors’ appetite for riskier assets  Other 0.83% remained robust for much of the period. In August, however, global concerns were intensified by North Korea’s missile tests, prompting investors to buy assets perceived as more stable, including gold, higher- rated bonds, the Swiss franc and the Japanese yen.

Lower-quality financials and utilities were the top-performing sectors over the period. EDF performed well on the back of a positive French election result. We sold our long-standing exposure to lower-quality European financials through derivatives, which made a significant contribution to returns. Our exposure to US inflation 28 February 2017 detracted from returns due to disappointing inflation data. A synthetic position created to benefit from the underperformance of Standard Chartered, was also a negative.  UK Sterling Denominated Fixed Rate Corporate Bonds 63.69%  UK Sterling Denominated Fixed Rate Government Bonds 5.24% Activity  UK Sterling Denominated Variable Rate Corporate Bonds 10.95% Over the period, we rotated from financials into non-financials, based on attractive valuations. We also  Euro Denominated Fixed Rate Corporate Bonds 6.74% reduced overseas exposure, maintaining a preference for sterling-denominated corporate bond markets.  Euro Denominated Fixed Rate Government Bonds 4.57% Euro Denominated Variable Rate Corporate Bonds 1.14%  Outlook US Dollar Denominated Fixed Rate Corporate Bonds 2.43%  We remain defensive in terms of our corporate bond risk, reflecting expensive market valuations and our  US Dollar Denominated Fixed Rate Government Bonds 0.56% preference for company and security selection. We prefer UK corporate bonds, which we believe are  US Dollar Denominated Variable Rate Corporate Bonds 2.30% underpinned by a favourable fundamental and technical outlook. We continue to favour BBB rated companies,  Other 2.38% which have less scope to increase debt than high-quality AAA/AA rated issues. We continue to like the yields on subordinated (with higher-risk instruments like subordinated corporate bonds, investors are only paid back once all “senior” debt holders have been paid in full) UK banks, high-quality corporate bonds with both debt and equity characteristics (hybrids) and debt backed by real assets. We maintain a preference for European high yield over the US and emerging-market debt.

We remain tactically cautious in terms of duration or interest rate exposure. We see the potential for higher interest rate volatility, given the potential for the ECB to reduce its asset purchases and the timing of Fed’s balance sheet reduction.

September 2017

57 BlackRock Investment Funds BlackRock Investment Funds 58 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Performance Record Performance Record continued

Net Asset Value Operating Charges

Net Asset Value 1.3.2017 17.5.2016 Net Asset Value per Unit Unit Class to 31.8.2017 to 28.2.2017† At 31 August 2017 Units in Issue £000’s p A Income 1.13% 1.23% A Income 1,000 1 108.8 A Accumulation 1.13% 1.23% A Accumulation 101,013 112 111.0 X Income 0.08% 0.08% X Income 1,000 1 108.5 X Accumulation 0.08% 0.09% X Accumulation 29,993,000 33,745 112.5 D Income 0.63% 0.73% D Income 206,032 224 108.5 D Accumulation 0.63% 0.73% D Accumulation 1,849,852 2,066 111.7 Z Income 0.48% 0.48% Z Income 65,161 71 108.5 Z Accumulation 0.48% 0.48% Z Accumulation 1,000 1 111.9 Operating charges are annualised and exclude portfolio trade-related costs, except costs paid to the custodian/depositary and entry/exit charges paid to an underlying collective investment scheme (if any). † Fund launched in May 2016. Distribution Payable for the period to 31 August 2017 Distribution payable on 31.10.2017 Unit Class Pence per Unit A Income 1.0030 A Accumulation 1.0031 X Income 1.5170 X Accumulation 1.5936 D Income 1.2630 D Accumulation 1.2861 Z Income 1.3187 Z Accumulation 1.3430

59 BlackRock Investment Funds BlackRock Investment Funds 60 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Portfolio Statement (unaudited) Portfolio Statement (unaudited) continued at 31 August 2017

Holding or Market % of Holding or Market % of Nominal Value Total Net Nominal Value Total Net Value Investment £000’s Assets Value Investment £000’s Assets

BONDS – 99.17%; 28.2.2017 97.62% £215,000 FirstGroup 8.75% Guaranteed Bonds 8/4/2021 269 0.74 £345,000 GKN 6.75% Bonds 28/10/2019 386 1.07 UK STERLING – 79.67%; 28.2.2017 79.88% £280,000 Global Switch 4.375% Guaranteed European Medium UK Sterling Denominated Fixed Rate Corporate Bonds – 69.04%; 28.2.2017 63.69% Term Notes 13/12/2022 315 0.87 £165,000 AA Bond 2.75% Bonds 31/7/2043 167 0.46 £270,000 Goldman Sachs 4.25% Senior European Medium Term £290,000 AA Bond 6.269% Bonds 2/7/2043 359 0.99 Notes 29/1/2026 308 0.85 £610,000 Anglian Water 1.625% Bonds 10/8/2025 614 1.69 £405,000 Goldman Sachs 5.5% Guaranteed Subordinated Bonds £340,000 Anglian Water Services Financing 2.625% Bonds 15/6/2027 343 0.95 12/10/2021 468 1.29 £510,000 Annington Funding 2.646% European Medium Term Notes £325,000 Great Rolling Stock 6.25% Guaranteed Senior European 12/7/2025 524 1.45 Medium Term Bonds 27/7/2020 370 1.02 £400,000 AT&T 5.5% Guaranteed Senior Bonds 15/3/2027 496 1.37 £400,000 Heathrow Funding 5.225% Guaranteed Senior European £290,000 Bank of America 5.5% Guaranteed Subordinated European Medium Term Bonds 15/2/2023 475 1.31 Medium Term Bonds 22/11/2021 336 0.93 £255,000 HSBC 6.5% Guaranteed Subordinated European Medium £200,000 Bank of Scotland 7.281% Perpetual 254 0.70 Term Bonds 7/7/2023 317 0.88 £560,000 Bank of Scotland 9.375% Guaranteed Subordinated Bonds £340,000 Imperial Tobacco Finance 8.125% Guaranteed European 15/5/2021 717 1.98 Medium Term Bonds 15/3/2024 465 1.28 £465,000 BAT 2.125% Bonds 15/8/2025 468 1.29 £300,000 InterContinental Hotels 3.75% European Medium Term £130,000 BAT International Finance 2.25% European Medium Term Notes 14/8/2025 338 0.93 Notes 9/9/2052 108 0.30 £380,000 Intu Metrocentre Finance 4.125% Senior Notes 6/12/2023 425 1.17 £300,000 BAT International Finance 6% Guaranteed European £360,000 London & Quadrant Housing Trust 2.25% 20/07/2029 365 1.01 Medium Term Bonds 29/6/2022 362 1.00 £226,025 Mitchells & Butlers Finance 6.013% Guaranteed Asset £460,000 BHP Billiton Finance 6.5% Bonds 22/10/2077 534 1.47 Backed Bonds 15/12/2030 275 0.76 £234,179 BL Superstores Finance 5.27% Guaranteed Asset Backed £580,000 National Westminster Bank 6.5% Guaranteed Subordinated Bonds 4/10/2030 264 0.73 Bonds 7/9/2021 687 1.90 £350,000 BP Capital Markets 1.177% European Medium Term Notes £285,000 Orange 5.75% Perpetual European Medium Term Notes 318 0.88 12/8/2023 343 0.95 £415,000 Porterbrook Rail Finance 5.5% Guaranteed Senior £470,000 British Telecommunications 5.75% Guaranteed Senior European Medium Term Notes 20/4/2019 444 1.23 Bonds 7/12/2028 625 1.73 £170,000 Prologis 2.25% Bonds 30/6/2029 168 0.46 £300,000 Brown-Forman 2.6% Bonds 7/7/2028 311 0.86 £125,000 Prudential 6.125% Guaranteed Subordinated European £300,000 Centrica 5.25% Subordinated European Medium Term Medium Term Bonds 19/12/2031 161 0.44 Notes 10/4/2075 322 0.89 £300,000 RWE Finance 5.625% Guaranteed European Medium Term £260,000 Comcast 5.5% Guaranteed Bonds 23/11/2029 352 0.97 Bonds 6/12/2023 369 1.02 £350,000 Co-Operative Bank 4.75% Guaranteed Bonds 11/11/2021 389 1.07 £200,000 Scottish Power 6.75% Bonds 29/5/2023 256 0.71 £200,000 DS Smith 2.875% European Medium Term Notes 26/7/2029 201 0.55 £270,000 Scottish Widows 5.5% Bonds 16/6/2023 307 0.85 £200,000 Électricité de France 6% Senior European Medium Term £390,000 Skipton Building Society 1.75% European Medium Term Notes 23/1/2114 292 0.81 Notes 30/6/2022 392 1.08 £245,000 Enel Finance International 5.625% Guaranteed European £375,000 Southern Gas Networks 2.5% Senior European Medium Medium Term Bonds 14/8/2024 304 0.84 Term Bonds 3/2/2025 396 1.09 £540,000 Enterprise Inns 6% Senior Bonds 6/10/2023 587 1.62 £455,000 SSE 3.625% Bonds 16/9/2077 463 1.28 £320,000 Eversholt Funding 5.831% Guaranteed Senior European £300,000 Telefónica Emisiones 5.289% Guaranteed European Medium Term Bonds 2/12/2020 366 1.01 Medium Term Bonds 9/12/2022 355 0.98 £350,000 FCE Bank 3.25% Senior European Medium Term Notes £240,143 Telereal Secured Finance 4.01% Asset Backed Notes 19/11/2020 370 1.02 10/12/2033 262 0.72

61 BlackRock Investment Funds BlackRock Investment Funds 62 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Holding or Market % of Holding or Market % of Nominal Value Total Net Nominal Value Total Net Value Investment £000’s Assets Value Investment £000’s Assets

£333,115 Telereal Securitisation 5.3887% Guaranteed Asset Backed £480,000 NGG Finance 5.625% Floating Rate Notes 18/6/2073 546 1.51 Bonds 10/12/2033 404 1.12 £199,000 Southern Water Services Finance 4.5% Senior Floating £377,703 Telereal Securitisation 5.5534% Asset Backed Bonds Rate European Medium Term Bonds 31/3/2038 221 0.61 10/12/2033 463 1.28 £310,000 Thames Water Utilities Cayman Finance 5.75% Floating £190,000 Tesco 6.125% Guaranteed Senior European Medium Term European Medium Term Bonds 13/9/2030 363 1.00 Bonds 24/2/2022 219 0.60 3,644 10.06 £190,243 Tesco Property Finance 7.6227% Guaranteed Mortgage Backed Bonds 13/7/2039 251 0.69 EURO – 10.46%; 28.2.2017 12.45% £275,000 Thames Water Utilities Cayman Finance 2.375% European Euro Denominated Fixed Rate Corporate Bonds – 5.14%; 28.2.2017 6.74% Medium Term Notes 3/5/2023 278 0.77 €460,000 DS Smith 1.375% European Medium Term Notes 26/7/2024 426 1.18 £450,000 Travis Perkins 4.5% Bonds 7/9/2023 469 1.29 €590,000 Imperial Brands Finance 1.375% Bonds 27/1/2025 547 1.51 £279,619 Unique Pub Finance 5.659% Bonds 30/6/2027 314 0.87 €275,000 Teva Pharmaceutical Finance Netherlands II BV 1.625% £580,000 Verizon Communications 4.75% Senior European Medium Bonds 15/10/2028 222 0.61 Term Notes 17/2/2034 687 1.90 €555,000 Thermo Fisher Scientific 1.95% Bonds 24/7/2029 511 1.41 £135,000 Virgin Media Secured Finance 5% Bonds 15/4/2027 141 0.39 €165,000 TOTAL 3.369% Perpetual European Medium Term Notes 156 0.43 £485,000 Vodafone 3% European Medium Term Notes 12/8/2056 426 1.18 1,862 5.14 £660,000 Volkswagen Financial Services 2.25% European Medium Term Notes 12/4/2025 666 1.84 Euro Denominated Fixed Rate Government Bonds – 5.32%; 28.2.2017 4.57% £650,000 Wells Fargo 2.125% European Medium Term Notes €1,070,000 Bundesobligation 0% Bonds 8/10/2021 1,006 2.78 20/12/2023 670 1.85 €135,000 France (Republic) 2% Government OAT Bonds 25/5/2048 132 0.36 £600,000 Western Power Distribution 3.625% Bonds 6/11/2023 657 1.81 €354,000 Italy (Republic) 1.3% Bonds 15/5/2028 337 0.93 €206,000 Italy (Republic) 3.45% Bonds 1/3/2048 196 0.54 25,007 69.04 €280,000 Spain (Kingdom) 1.45% Bonds 31/10/2027 255 0.71 UK Sterling Denominated Fixed Rate Government Bonds – 0.57%; 28.2.2017 5.24% 1,926 5.32 £29,000 Treasury 0.125% Inflation Linked Bonds 22/11/2065 72 0.20 £85,000 Treasury 4.25% Stock 7/12/2046 134 0.37 Euro Denominated Variable Rate Corporate Bonds – 0.00%; 28.2.2017 1.14% 206 0.57 US DOLLAR – 9.04%; 28.2.2017 5.29% UK Sterling Denominated Variable Rate Corporate Bonds – 10.06%; 28.2.2017 10.95% US Dollar Denominated Fixed Rate Corporate Bonds – 7.98%; 28.2.2017 2.43% £210,000 Clerical Medical 7.375% Perpetual Floating Rate Bonds 219 0.61 $750,000 Amazon 4.05% Bonds 22/8/2047 597 1.65 £500,000 Électricité de France 5.875% Perpetual Subordinated $1,225,000 Barclays 7.625% Subordinated Notes 21/11/2022 1,092 3.02 Floating Rate European Medium Term Notes 514 1.42 $450,000 Charter Communications Operating 6.484% Bonds £180,000 Glencore Finance Europe 6% Variable European Medium 23/10/2045 402 1.11 Term Notes 3/4/2022 211 0.58 $465,000 Comcast 3.15% Bonds 15/2/2028 360 0.99 £630,787 Greene King Finance 3.02519% Floating Rate Asset $500,000 Credit Suisse 6.5% Subordinated Bonds 8/8/2023 439 1.21 Backed European Medium Term Notes 15/12/2033 620 1.71 2,890 7.98 £390,000 Legal & General 5.875% Guaranteed Perpetual Subordinated Floating Rate European Medium Term US Dollar Denominated Fixed Rate Government Bonds – 0.00%; 28.2.2017 0.56% Bonds 412 1.14 US Dollar Denominated Variable Rate Corporate Bonds – 1.06%; 28.2.2017 2.30% £200,000 Lloyds Banking 7.625% Perpetual Subordinated Floating $450,000 JP Morgan Chase 6.125% Perpetual Subordinated Floating Rate Notes 226 0.62 Rate Notes 384 1.06 £300,000 Nationwide Building Society 6.875% Perpetual Subordinated Floating Rate European Medium Term Notes 312 0.86

63 BlackRock Investment Funds BlackRock Investment Funds 64 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Portfolio Statement (unaudited) continued Portfolio Statement (unaudited) continued

Holding or Market % of Holding or Market % of Nominal Value Total Net Nominal Value Total Net Value Investment £000’s Assets Value Investment £000’s Assets

DERIVATIVES – (0.35)%; 28.2.2017 (0.40)% 749,000 Citibank (UK sterling) 1.1405% vs Variable 5/6/2027 3 0.01 76,000 Citibank (UK sterling) 1.5675% vs Variable 11/7/2057 (5) (0.01) Credit Default Swaps – 0.33%; 28.2.2017 0.09% 265,000 Goldman Sachs International (US dollar) 2.4235% vs 270,000 Bank of America (Barclays Bank) 1% 20/6/2022 (3) (0.01) Variable 22/8/2047 (2) (0.01) 600,000 BNP Paribas (Standard Chartered Bank) 1% 20/6/2021 (15) (0.04) (1,200,000) Citibank (iTraxx) 5% 20/12/2021 141 0.39 (1) (0.01) 300,000 JP Morgan Chase Bank (Barclays Bank) 1% 20/6/2022 (3) (0.01) Portfolio of investments 35,793 98.82 120 0.33 Net other assets 428 1.18 Forward Currency Contracts – (0.50)%; 28.2.2017 (0.22)% Total net assets 36,221 100.00 €2,100,000 Euro vs UK sterling 51 0.14 £5,650,579 UK sterling vs Euro (226) (0.62) Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market. ^ Investments which are less than £500 are rounded to zero. £3,539,325 UK sterling vs US dollar (8) (0.02) The counterparties for the forward currency contracts are Bank of America, BNP Paribas Arbitrage SNC, CitiGroup Global Markets Limited, Goldman Sachs $210,000 US dollar vs UK sterling 1 0.00 International, J.P Morgan Securities Plc, Royal Bank of Scotland Plc and Standard Chartered. (182) (0.50) Futures – (0.17)%; 28.2.2017 (0.28)% 18 90 Day Euro December 2017^ – 0.00 (18) 90 Day Euro December 2019 (4) (0.01) (5) Euro-Bobl September 2017 (2) (0.01) (6) Euro-BTP September 2017 (6) (0.02) (18) Euro-Bund September 2017 (22) (0.06) (1) Euro-Buxl 30 Year Bond September 2017 (1) 0.00 (3) Euro-Oat September 2017 (3) (0.01) (44) Long Gilt December 2017 (18) (0.05) (13) US 10 Year Note (CBT) December 2017 (1) 0.00 (29) US 5 Year Note (CBT) December 2017 (4) (0.01) (4) US Ultra Bond (CBT) December 2017 (2) 0.00 (63) (0.17) Interest Rate Swaps – (0.01)%; 28.2.2017 0.01% 359,000 Citibank (Euro) 1.4225% vs Variable 15/3/2027 1 0.00 34,000 Citibank (UK sterling) 3.417% vs Variable 15/7/2047 1 0.00 279,000 Citibank (UK sterling) 3.44% vs Variable 15/7/2027 2 0.01 63,000 Citibank (UK sterling) 3.475% vs Variable 15/7/2047^ – 0.00 29,000 Citibank (UK sterling) 3.48% vs Variable 15/4/2047^ – 0.00 397,000 Citibank (UK sterling) 3.55% vs Variable 15/3/2027 (7) (0.02) 862,000 Citibank (UK sterling) 3.58% vs Variable 15/3/2022 5 0.01 755,000 Goldman Sachs International (Euro) 1.21% vs Variable 15/7/2022^ – 0.00 755,000 Goldman Sachs International (Euro) 1.405% vs Variable 15/7/2027 1 0.00 29,000 Goldman Sachs International (UK sterling) 3.4937% vs Variable 18/4/2047^ – 0.00

65 BlackRock Investment Funds BlackRock Investment Funds 66 BlackRock Sterling Strategic Bond Fund BlackRock Sterling Strategic Bond Fund

Statement of Total Return (unaudited) Balance Sheet (unaudited) for the six months ended 31 August 2017 at 31 August 2017

For the period 31.8.2017 28.2.2017 from 17.5.2016 £000’s £000’s 31.8.2017 to 31.8.2016 Assets: £000’s £000’s £000’s £000’s Fixed assets Income – Investment assets 36,125 32,142 Net capital gains 789 1,690 Current assets Revenue 557 283 – Debtors 691 636 Expenses (12) (5) – Cash and bank balances 272 571 Interest payable and similar charges (52) (6) Total assets 37,088 33,349 Net revenue before taxation 493 272 Liabilities: Taxation (4) – Investment liabilities (332) (330) Net revenue after taxation 489 272 Creditors Total return before distributions 1,278 1,962 – Bank overdrafts (524) – Distributions (489) (272) – Distributions payable (3) (1) Change in net assets attributable to unitholders from investment – Other creditors (8) (295) activities 789 1,690 Total liabilities (867) (626) Net assets attributable to unitholders 36,221 32,723

Statement of Change in Net Assets Attributable to Unitholders (unaudited) for the six months ended 31 August 2017 G D Bamping (Director) M T Zemek (Director) For the period BlackRock Fund Managers Limited from 17.5.2016 17 October 2017 31.8.2017 to 31.8.2016 £000’s £000’s £000’s £000’s

Opening net assets attributable to unitholders 32,723 – Amounts receivable on issue of units 2,265 30,008 Amounts payable on cancellation of units (59) – 2,206 30,008 Change in net assets attributable to unitholders from investment activities 789 1,690 Retained distribution on accumulation units 503 218 Closing net assets attributable to unitholders 36,221 31,916

The above statement shows the comparative closing net assets at 31 August 2016 whereas the current accounting period commenced 1 March 2017.

67 BlackRock Investment Funds BlackRock Investment Funds 68 Supplementary Information

Efficient Portfolio Management Techniques The following table details the underlying exposure value on a gross absolute basis for TRS (including CFDs), The Manager may, on behalf of certain Funds and subject to the conditions and within the limits laid down analysed by counterparty as at 31 August 2017. by the Financial Conduct Authority and the Prospectus, employ techniques and instruments relating to transferable securities, including investments in OTC Financial Derivative Instruments (“FDIs”) provided TRS (including that such techniques and instruments are used for efficient portfolio management purposes or to provide CFDs) Counterparty’s protection against exchange risk or for direct investment purposes, where applicable. country of Underlying Counterparty establishment exposure In addition to the investments in FDIs, the Funds may employ other techniques and instruments relating BlackRock Global Long/Short Equity Fund £000’s to transferable securities and money market instruments, subject to the conditions set out in the Fund’s Prospectuses, as amended from time to time, and the relevant ESMA Guidelines, such as repurchase / Citigroup Global Markets Limited UK 6,518 reverse repurchase transactions, (“repo transactions”) and securities lending. Merrill Lynch International UK 2,837 Morgan Stanley & Co. International plc UK 4,393 Total Return Swaps (“TRS”) (including CFDs) Total 13,748 All TRS (including CFDs) are entered into by the Funds under an International Swaps and Derivatives Associations, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement. An ISDA Master BlackRock Dynamic Return Strategy Fund and BlackRock Sterling Strategic Bond Fund did not hold any open Agreement is a bilateral agreement between the Fund and a counterparty that governs OTC FDIs (including positions in either TRS or CFDs as at 31 August 2017. TRS and CFDs) entered into by the parties. The parties’ exposures under the ISDA Master Agreement are netted and collateralised together, therefore any collateral disclosures provided are in respect of all OTC The following table provides an analysis of the maturity tenor of TRS (including CFDs) as at 31 August 2017. FDIs entered into by the Funds under the ISDA Master Agreement, not just TRS and CFDs. All collateral received/posted by the Funds under the ISDA Master Agreement is transferred bilaterally under a title transfer Maturity Tenor arrangement. 31 – 90 91 – 365 More than Open The following table details the value of TRS (including CFDs) as a proportion of the Funds’ NAV, as at Fund days days 365 days transactions Total 31 August 2017 and the returns earned for the period ended 31 August 2017. The value of TRS (including BlackRock Global Long/Short Equity Fund £000’s £000’s £000’s £000’s £000’s CFDs) is based on the underlying exposure value on a gross absolute basis. TRS (including CFDs) – – – 13,748 13,748

TRS (including CFDs) Open transactions are those transactions that are recallable or terminable on a daily basis and includes contracts for differences. Returns % earned Fund of NAV £000's BlackRock Dynamic Return Strategy Fund and BlackRock Sterling Strategic Bond Fund did not hold any open positions in either TRSs or CFDs as at 31 August 2017. BlackRock Dynamic Return Strategy Fund – (177) BlackRock Global Long/Short Equity Fund 203.49 37 Collateral The Funds engage in activities which may require collateral to be provided to a counterparty (“collateral All returns and costs from OTC FDIs will accrue to the Funds and are not subject to any returns or costs posted”) or may hold collateral received (“collateral received”) from a counterparty. sharing arrangements with the Fund’s Manager or any other third parties.

As at 31 August 2017, no collateral was posted or received in respect to the holding of TRS (including CFDs).

69 BlackRock Investment Funds BlackRock Investment Funds 70 About us

BlackRock is a premier provider of asset management, risk management, and advisory services to institutional, intermediary, and individual clients worldwide. As of 30 June 2017, the fi rm manages £4.39 trillion across asset classes in separate accounts, mutual funds, other pooled investment vehicles, and the industry-leading iShares® exchange-traded funds.

Through BlackRock Solutions®, the fi rm offers risk management and advisory services that combine capital markets expertise with proprietarily-developed analytics, systems, and technology. Through BlackRock Solutions, the Firm provides risk management and enterprise investment services for over 200 clients.

BlackRock serves clients in North and South America, Europe, Asia, Australia, Africa, and the Middle East. Headquartered in New York, the fi rm maintains offi ces in over 30 countries around the world.

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