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 2014 Contents BSF Chairman’s Letter to Shareholders 2 BSF Investment Advisers Report 4 Board of Directors 9 Management and Administration 9 Statement of Net Assets 10 Three Year Summary of Net Asset Values 14 Statement of Operations and Changes in Net Assets 18 Statement of Changes in Shares Outstanding 22 Portfolio of Investments BlackRock Americas Diversified Equity Absolute Return Fund 26 BlackRock Asia Extension Fund 47 BlackRock Emerging Markets Absolute Return Fund 52 BlackRock Emerging Markets Allocation Fund 55 BlackRock Emerging Markets Flexi Dynamic Bond fund 66 BlackRock Euro Dynamic Diversified Growth Fund 69 BlackRock European Absolute Return Fund 73 BlackRock European Constrained Credit Strategies Fund 77 BlackRock European Credit Strategies Fund 89 BlackRock European Diversified Equity Absolute Return Fund 104 BlackRock European Opportunities Extension Fund 117 BlackRock Fixed Income Strategies Fund 120 BlackRock Fund of iShares – Conservative 130 BlackRock Fund of iShares – Dynamic 131 BlackRock Fund of iShares – Growth 132 BlackRock Fund of iShares – Moderate 133 BlackRock Global Absolute Return Bond Fund 134 BlackRock Global Long/Short Equity Fund 176 BlackRock Latin American Opportunities Fund 190 BlackRock Multi-Strategy Absolute Return Fund 192 Notes to the Financial Statements 224 General Information 234 Subscriptions may be made only on the basis of the current Prospectus, together with the most recent audited annual report and accounts and unaudited interim report and accounts. Copies are available from the Investor Services Centre, the Transfer Agent, the Manager or any of the Distributors. Unaudited Interim Report and Accounts 1 BSF Chairman’s Letter to Shareholders November 2014 Dear Shareholder I am writing to update you on the activities of BlackRock Strategic Funds (the “Company”), a Luxembourg UCITS Fund range providing clients with access to BlackRock investment products which seek to take full advantage of the expanded investment powers incorporated in the UCITS directive. This report covers the Company’s six month period from 1 June 2014 to 30 November 2014. The half year to 30 November 2014 saw increased volatility in equity markets as fears mounted on the outlook for global economic growth. Data from the Eurozone in particular weighed on sentiment. However, after a difficult October 2014, stock markets had recovered somewhat towards the end of the period. That said there was a significant disparity between different markets: the US market, for example, raced ahead, while European markets remained lacklustre. Also notable was a marked preference for lower risk assets. Yields on government bonds fell to new lows, with the yield on 10 year German bunds dipping to 0.7% by the end of the period as investors anticipated a fresh round of monetary easing. However, monetary policy started to diverge, as Japan and the Eurozone remained firmly in loosening mode, while the US and UK mulled interest rate rises. As it was, although the quantitative easing programme in the US came to an end in October 2014 as planned, interest rate rises continued to be deferred into 2015 and beyond. Investors retreated from higher risk assets, particularly in October 2014. Mid and smaller companies were sold off across the globe after a long run of outperformance. Equally, emerging markets gave up some of their recent gains. Surprisingly, of the major developing economies it was not Russia that hurt emerging market investors hardest, but Brazil. The disruption surrounding the election, plus the re-election of the market’s less favoured candidate, Dilma Rousseff, hurt investor returns. The UK was another notable weak spot, after the stronger currency hurt corporate earnings for a number of companies. Following a period of strong performance, many asset classes already looked fairly valued at the start of the period. The recent volatility has exacerbated that in some cases, and diminished it in others. Opportunities remain, but both bond and equity markets demand selectivity in the current market. The performance of the Funds is covered in more detail in the separate Investment Advisers Report, which also sets out some views regarding the investment outlook. Overall, the assets under management in the Company range have risen around 18% from USD 7,598m to USD 8,935m. Although the BlackRock Fixed Income Strategies Fund saw the strongest growth over the period, rising 182% from EUR 626m to EUR 1,761m, a number of the absolute return strategies also attracted strong flows. The BlackRock Emerging Markets Absolute Return Fund grew by 58% over the period, to USD 66m, while assets in the BlackRock European Diversified Equity Absolute Return Fund rose 34% to EUR 317m. The BlackRock Global Absolute Return Bond Fund rose 57% to EUR 468m. The BlackRock European Opportunities Extension Fund also saw strong growth in spite of the relative weakness of European markets, rising 24% to EUR 636m. The BlackRock Latin American Opportunities Fund was hit by the relative weakness of the regional stock markets, with assets declining by 12%. BlackRock is fully committed to remaining at the forefront of the European mutual funds industry by bringing innovative investment products to our clients and is actively working on adding other funds to the range as our product development process brings forward appropriate investment opportunities for clients. With this in mind, we took the decision to launch the BlackRock Global Long/Short Equity Fund and BlackRock Multi-Strategy Absolute Return Fund in June of this year. The BlackRock Global Long/Short Equity Fund aims to achieve a positive absolute return regardless of market conditions, by taking synthetic long and synthetic short investment exposures. This should be well-adapted to a market environment in which there is an increasing dispersion between individual stock performances. The BlackRock Multi-Strategy Absolute Return Fund will invest across a range of asset classes, including but not limited to: shares, fixed income securities, money market instruments, funds, deposits and cash. Should you have any questions on any of this Letter, please contact us via our website: www.blackrockinternational.com The information stated in this report is historical and not necessarily indicative of future performance. 2 BlackRock Strategic Funds (BSF) BSF Chairman’s Letter to Shareholders November 2014 continued Significant Events In a letter to shareholders dated 27 June 2014, the Board of Directors of the Company advised shareholders of its decision to liquidate the assets held in the underlying investment portfolio for each of the following Funds, with the intention of distributing redemption proceeds to shareholders on 1 September 2014: BlackRock Fund of iShares – Conservative BlackRock Fund of iShares – Dynamic BlackRock Fund of iShares – Growth BlackRock Fund of iShares – Moderate In a letter to shareholders dated 21 July 2014, in order to facilitate an orderly exit from the Funds for all shareholders, the Board of Directors of the Company decided to postpone the effective date of the closure until 31 December 2014 (the “New Effective Date”). The Funds were reopened to subscriptions from 8 July 2014. Yours faithfully, Nicholas C.D. Hall Chairman December 2014 The information stated in this report is historical and not necessarily indicative of future performance. Unaudited Interim Report and Accounts 3 BSF Investment Advisers Report Performance Overview 1 June 2014 – 30 November 2014 Disclosed in the table below are the performance returns for the primary non-distributing share class for each Fund, which has been selected as a representative share class. Calculation methodology is based on industry standards. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. The Fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The performance figures do not consider charges and fees that may be levied at the time of subscription or redemption of shares. Levels and bases of taxation may change from time to time. Subscriptions may be made only on the basis of the current Prospectus, of which the most recent annual report and audited accounts and interim report and unaudited accounts form an integral part, and Key Investor Information Document (the “KIID”). Copies are available from Investor Services, the Transfer Agent, the Manager or any of the Representatives or Distributors. BlackRock Strategic Funds is only available for investment by non-US citizens who are not residents of the US. It is not offered for sale or sold in the US, its territories or possessions. Performance for the Period from 1 June 2014 to 30 November 2014 Calendar Year Performance 6 month 2013 2012 2011 Launch Date BlackRock Americas Diversified Equity Absolute Return Fund 'A' Non Dist (USD) 2.20% (0.98)% 10.27% – 17 February 2012 LIBOR 3 Month Index (USD) 0.12% 0.29% 0.41% – BlackRock Asia Extension Fund 'A' Non Dist (USD) 7.38% 6.71% 11.00% – 10 February 2012 MSCI All Country Asia ex Japan (USD) 3.09% 3.07%