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AUDITED ANNUAL REPORT AND ACCOUNTS TITLE (40–50 CHARACTERS) BLACKROCK STRATEGIC FUNDS (BSF) SUBTITLE (40-50 CHARACTERS) R.C.S. Luxembourg: B 127481 31 MAY 2013 Contents BSF Chairman’s Letter to Shareholders 2 BSF Investment Adviser’s Report 3 BSF Directors’ Report 5 Board of Directors 8 Management and Administration 8 Statement of Net Assets 9 Three Year Summary of Net Asset Values 12 Statement of Operations and Changes in Net Assets 15 Statement of Changes in Shares Outstanding 18 Portfolio of Investments 21 BlackRock Americas Diversified Equity Absolute Return Fund 21 BlackRock Asia Extension Fund 39 BlackRock Emerging Markets Absolute Return Fund 43 BlackRock Euro Dynamic Diversified Growth Fund 46 BlackRock European Absolute Return Fund 49 BlackRock European Constrained Credit Strategies Fund 52 BlackRock European Credit Strategies Fund 63 BlackRock European Diversified Equity Absolute Return Fund 75 BlackRock European Opportunities Absolute Return Fund 86 BlackRock European Opportunities Extension Fund 88 BlackRock Fixed Income Strategies Fund 91 BlackRock Fund of iShares – Conservative 99 BlackRock Fund of iShares – Dynamic 100 BlackRock Fund of iShares – Growth 101 BlackRock Fund of iShares – Moderate 102 BlackRock Global Absolute Return Bond Fund 103 BlackRock Latin American Opportunities Fund 132 BlackRock Mining Opportunities Fund 134 Notes to the Financial Statements 136 Audit Report 146 General Information 147 Appendix I – Global Exposure and Leverage (Unaudited) 148 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. Audited Annual Report and Accounts 1 BSF Chairman’s Letter to Shareholders May 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 which seek to take full advantage of the expanded investment powers incorporated in the UCITS directive. This report covers the Company’s financial year 1 June 2012 to 31 May 2013. Overall, the year under review was positive for global equity markets as the Eurozone crisis and the supportive actions of the developed world’s central banks dominated market sentiment. The European Central Bank (“ECB”) intervened to shore up banks in peripheral Eurozone countries, the US Federal Reserve (the “Fed”) extended its quantitative easing (“QE”) programme, and Japan’s new Prime Minister Shinzo Abe ushered in the era of ‘Abenomics’ with the introduction of a series of ambitious programmes to boost the country’s economy. June 2012 saw an important statement by the ECB president that the Bank would do ‘whatever it takes to preserve the Euro’. This positive rhetoric calmed global markets, with investors growing increasingly optimistic about the effect that monetary authorities’ stimulus measures would have on asset prices. The Japanese equity market experienced a particularly strong rally as the new Japanese government voted in at the end of 2012 pressed on with a more aggressive monetary policy aimed at weakening the Yen. Financial markets were helped further at the beginning of 2013 by a partial resolution to the US ‘fiscal cliff’, improving economic indicators, and the cushion of the Fed’s monetary stimulus programme. However, the overall economic picture remained mixed and emerging markets lagged other global equity markets as they began to be affected by the strengthening US dollar and weakening commodity prices. Meanwhile, China’s disappointing economic indicators cast a pall over Asian emerging markets. Despite the ECB’s supportive stance, the Eurozone suffered from political turmoil in the peripheral countries of Greece, Italy and Cyprus, with weaker-than-expected economic indicators from France and Germany also not helping market sentiment. Later in the year, a testimony by the Fed chairman Ben Bernanke to the US congress underlined how reliant world markets have become on extremely loose monetary policy. Bernanke stated in May that the central bank might ‘taper’ its asset purchases at future monetary policy meetings if economic news remained on a positive trajectory. World markets baulked at this news, as equity, fixed income and currency markets had all been pricing in a continuation of the existing monetary stimulus programme through to the end of 2013. This left investors unsettled at the end of an otherwise encouraging year for markets. The performance of the Funds is covered in more detail in the separate Investment Adviser's report, which also sets out some views regarding the investment outlook. Overall, the assets under management in the BlackRock Strategic Funds range have increased from USD2,047m to USD3,937m, which reflected an improvement in investors’ risk appetite over the 12-month period. One of the fastest growing funds within the range was the BlackRock European Absolute Return Fund, which increased from EUR418.5m to EUR1.2bn over the year. Some of the new funds launched last year have also done well, with BlackRock Americas Diversified Equity Absolute Return Fund, launched on 17 February 2012, increasing from USD6.8m to USD235.1m and the BlackRock Global Absolute Return Bond Fund, which was launched on 25 May 2012, attracting assets of EUR111.7m. The BlackRock Euro Dynamic Diversified Growth Fund more than doubled in size from EUR66.8m to EUR160.5m. 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. In the middle of November 2012, we launched the BlackRock Emerging Markets Absolute Return Fund, which seeks to generate positive absolute returns irrespective of market conditions. This is achieved through a portfolio of long and short emerging market equity exposures, targeting absolute alpha while delivering low volatility. The Fund employs a long/short equity strategy with net exposure ranging from -10% to +20%. There was one fund rating change within the fund range, when the BlackRock European Absolute Return Fund, which has been managed by Vincent Devlin since launch in 2009, was awarded a Bronze Rating by Morningstar in November 2012. 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 2 BlackRock Strategic Funds (BSF) BSF Investment Adviser’s Report Performance Overview 1 June 2012 – 31 May 2013 Market Review Emerging market equities lagged developed markets as growth Most global equity markets delivered double-digit gains over slowed in key emerging economies. In fixed income markets, the twelve month period. The exception to this was emerging returns from government bonds were generally poor, with the JP markets, particularly Latin America, where returns were Morgan Global Government Bond Index falling 3.4% in sterling positive but in single figures. The European equity market terms. Sovereign debt underperformed corporate bonds, where was especially strong, rising in each of those twelve months demand for higher-yielding assets was particularly supportive. despite ongoing economic woes and uncertainty surrounding Medium and longer dated US Treasuries, meanwhile, benefited the sovereign debt crisis. from the Fed’s QE programme. The high level of liquidity provided by central banks gave the Performance data to which we refer in the following impetus for investors to send share prices higher. While the comments is for the primary share class, stated in the base ECB was less profligate than monetary authorities of the US, currency of each respective Fund. the UK or Japan, the very promise that the ECB would do ‘whatever it takes to protect the Euro’ seemed to give Equity Funds Performance investors the assurance they needed to invest in equities. The equity-based funds within the BlackRock Strategic Funds There were, however, significant speed bumps in Europe, range performed well across the board. The BlackRock including a renegotiation of Greece’s bailout terms, a bailout European Opportunities Absolute Return Fund gained 7.6% in for Cyprus’s banks, an uncertain outcome to the Italian the 12 months to 31 May 2013, significantly outperforming the election and the threat posed by a spike in Spanish bond Euribor benchmark, which returned 0.2% over the same period. yields. Added to this, economic news across the region The BlackRock European Absolute Return Fund rose 2.0%, also pointed to another year of recession. Regardless, investors beating its Euribor benchmark. Both funds therefore continued found a way to look past these short-term problems and to match their objectives of providing positive performance maintain their enthusiasm for equities. within a low-volatility and risk-aware strategy. Improving economic indicators in the US were a second The BlackRock European Opportunities Extension Fund important driver for world markets. As the monetary gained 37.3% in the year, outperforming its S&P Europe BMI stimulus programme took effect midway through the year, benchmark, which climbed 30.2%. The BlackRock Asia the domestic economy began to pick up and we saw a Extension Fund, meanwhile,

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