UNAUDITED INTERIM REPORT AND ACCOUNTS TITLE (40–50 CHARACTERS) BLACKROCK STRATEGIC FUNDS (BSF) SUBTITLE (40-50 CHARACTERS) R.C.S. Luxembourg: B 127481 30 NOVEMBER 2013 Contents BSF Chairman’s Letter to Shareholders 2 BSF Investment Adviser’s Report 4 Board of Directors 6 Management and Administration 6 Statement of Net Assets 7 Three Year Summary of Net Asset Values 11 Statement of Operations and Changes in Net Assets 15 Statement of Changes in Shares Outstanding 19 Portfolio of Investments BlackRock Americas Diversified Equity Absolute Return Fund 22 BlackRock Asia Extension Fund 45 BlackRock Emerging Markets Absolute Return Fund 49 BlackRock Emerging Markets Allocation Fund 52 BlackRock Emerging Markets Flexi Dynamic Bond Fund 59 BlackRock Euro Dynamic Diversified Growth Fund 61 BlackRock European Absolute Return Fund 64 BlackRock European Constrained Credit Strategies Fund 67 BlackRock European Credit Strategies Fund 79 BlackRock European Diversified Equity Absolute Return Fund 92 BlackRock European Opportunities Extension Fund 103 BlackRock Fixed Income Strategies Fund 106 BlackRock Fund of iShares – Conservative 114 BlackRock Fund of iShares – Dynamic 115 BlackRock Fund of iShares – Growth 116 BlackRock Fund of iShares – Moderate 117 BlackRock Global Absolute Return Bond Fund 118 BlackRock Latin American Opportunities Fund 146 BlackRock Mining Opportunities Fund 148 Notes to the Financial Statements 150 General Information 159 Subscriptions may be made only on the basis of the current Prospectus, together with the most recent audited annual report and accounts and unaudited interim report and accounts. Copies are available from the Investor Services Centre, the Transfer Agent, the Manager or any of the Distributors. Unaudited Interim Report and Accounts 1 BSF Chairman’s Letter to Shareholders November 2013 Dear Shareholder, I am writing to update you on the activities of BlackRock Strategic Funds (“the Company”), a Luxembourg UCITS Fund range providing clients with access to BlackRock investment products that seek to take full advantage of the expanded investment powers incorporated in the UCITS directive. This report covers a six month period from 1 June 2013 to 30 November 2013. After some strong gains seen earlier in the year, equity returns moderated over the period as concerns about a potential ‘tapering’ (reduction) of quantitative easing (“QE”) purchases led to profit-taking by market participants. Anxiety over the sustainability of the rate of China’s economic growth also weighed on markets, particularly those of the Asia Pacific region. Elsewhere, Japanese equities continued to perform well, supported by strong optimism about the direction of the country’s economic policies. Having initially also benefited from global central banks’ buying of bonds in significant quantities, fixed income investors seemed to increasingly favour higher yielding bonds as many areas of the government bond markets began looking fully valued. Concerns over the timing of QE tapering subsequently led to a sharp rise in bond yields. Global government bonds ended the period in negative performance territory, while UK index-linked gilts and investment grade corporate bonds proved somewhat more resilient. Over the period, there were a number of important regulatory developments, which are expected to affect the way fund providers service their clients and communicate with them. They included: The European Securities and Markets Authority (ESMA) published guidelines aimed at enhancing investor protection, including additional disclosures being provided to all investors. In addition, new risk management obligations relating to the use of collateral could result in lower permissible exposures to certain counterparties and governments. The European Market Infrastructure Regulation (EMIR) will deliver mandatory clearing through central counterparties as it attempts to increase the resilience of the market and its participants. The requirements apply to all counterparties who engage in over-the-counter derivative business. The use of central counterparties and the associated compliance burden imposed could also result in an increase in trading costs. A US law, the Foreign Account Tax Compliance Act (FATCA) is expected to have far-reaching consequences in many other global jurisdictions. Financial institutions, including asset managers, will be required to obtain information on clients in order to identify whether a withholding tax is payable. The tax is intended to prevent US investors circumventing US taxation requirements through the use of non-US investments. The performance of the Funds is covered in more detail in the separate Investment Adviser's report, which also sets out some views regarding our investment outlook. Overall, the assets under management in the BlackRock Strategic Funds range have increased from USD3,937.0m to USD5,614.9m, which reflected the continued ‘risk-on’ sentiment among market participants over the period. One of the fastest-growing Funds within the range was the multi-asset BlackRock Euro Dynamic Diversified Growth Fund, which increased from EUR160.5m to EUR359.9m over the six months. The BlackRock Emerging Markets Flexi Dynamic Bond Fund, which was launched during the six month period, reached USD80.1m. It was a very good period for the BlackRock Global Absolute Return Bond Fund (“GARBF”), which increased in size from EUR111.7m to EUR187.5m. This was during a period which was generally difficult for bond investors. GARBF targets positive returns in all market conditions by extracting relative value from a very broad range of fixed income-related investment strategies, some of them traditional actively managed, and some of them based on quantitative models. GARBF also uses derivatives to enhance its risk-management capabilities. At times, these financial instruments are used to quickly build protection (hedge) against sudden market movements. The largest Fund in the BSF range, the BlackRock European Absolute Return Fund, grew from EUR1,203.6m to EUR1,504.3m over the period. Having reached its capacity, the Fund is now closed to new subscriptions. Another one of our flagship bond Funds, BlackRock Fixed Income Strategies Fund (“FISF”), grew from EUR113.0m to EUR179.7m. The Fund aims to offer attractive returns at lower volatility than the underlying market by investing across different European fixed income sectors. FISF is able to go actively short duration (reverse its sensitivity to interest rate changes) and protect clients’ capital during periods of rising interest rates. 2 BlackRock Strategic Funds (BSF) BSF Chairman’s Letter to Shareholders November 2013 continued The BlackRock European Credit Strategies Fund also attracted good flows for the period under review as it grew from EUR766.7m to EUR1,104.1m. Funds which experienced a reduction in size over the reporting period included BlackRock Americas Diversified Equity Absolute Return Fund, which declined from USD235.1m to USD186.2m, BlackRock Latin American Opportunities Fund, which declined from USD169.7m to USD146.0m and BlackRock Mining Opportunities Fund, which declined from USD10.3m to USD9.1m. BlackRock is fully committed to remaining at the forefront of the European Mutual Funds Industry by bringing innovative investment products to our clients and is actively working on adding other Funds to the range as our product development process brings forward appropriate investment opportunities for clients. On 12 June 2013, we launched the BlackRock Emerging Markets Flexi Dynamic Bond Fund, which seeks to maximise total return by taking long, synthetic long and synthetic short positions in predominantly fixed income securities. We also launched the BlackRock Emerging Markets Allocation Fund on 15 November 2013. The Fund seeks to achieve total returns over the investment cycle by investing in a broad range of asset classes that provide exposure to factors that are positively correlated with growth in Emerging Markets (“EM”). Such asset classes include equity securities, fixed and floating-rate debt instruments, derivatives, other investment companies, including affiliated and unaffiliated mutual funds and Exchange-Traded Funds “(ETF”), currency- and commodity-related instruments and structured products. The BlackRock European Opportunities Absolute Return Fund was closed in July 2013 following a number of large redemptions, which led to a fall in the Funds’ assets to under €1 million, rendering it commercially unviable. Therefore, it was decided that it was in the best interests of shareholders to close this Fund and distribute redemption proceeds to shareholders. Should you have any questions on any of this material, please contact us via our website: www.blackrockinternational.com Yours faithfully, Nicholas C.D. Hall Chairman Unaudited Interim Report and Accounts 3 BSF Investment Adviser’s Report Performance Overview 1 June 2013 – 30 November 2013 Market Overview Another particularly strong performer during the period was The period was underpinned by a growing belief in the the BlackRock European Diversified Equity Absolute Return market that economic recovery in the US was solidifying, Fund, which gained 10.1%, compared to 0.1% for its despite the level of unemployment remaining high. But benchmark, 3 Month Euribor Index. The Fund invests in a sentiment faded somewhat after the Federal Reserve (“Fed”) very diversified range of stocks and can therefore seek to Chairman Ben Bernanke indicated that the bank’s take advantage of a wide range of opportunities.