Fund Objective

To achieve long-term capital growth for investors.

View on Past Performance

The BlackRock US Dynamic Fund struggled, along with the general equity averages, returning -6.3% for the quarter ending September 2008, versus the 1.2% return of the benchmark Russell 1000 index. It should be noted that Fund performance was negatively impacted by the timing differential between the Fund's valuation point and that of the index. The positives during the quarter were stock selection in energy and an underweight stance in utilities.However, negatives included our relative underweights in financials and consumer staples, plus stock selection in materials, particularly metals. At the stock level, the biggest detractors to performance included Nucor, Noble Energy and Hess as well as underweighting Bank of America, Wells Fargo and JPMorgan.In contrast, our stronger contributors included Capital One Financial, Chubb Corp, and Express Scripts, as well as our underweights in American International Group (zero weight), Apple and Schlumberger. Activity during the quarter saw us increase our weightings in consumer staples, healthcare and consumer discretionary, while decreasing our weightings in materials and industrials.Our largest purchases included Kroger, Family Dollar Stores, Amgen and St. Jude Medical Inc; our largest sales included Anadarko Petroleum, Deere, Biogen Idec and Parker-Hannifin.

Future Expectations

We continue to emphasise quality of balance sheet (absence of financing needs) and income statement (good free cash flow characteristics) during this turbulent period. From a sector standpoint, our largest overweights include Information technology, energy and healthcare, while our largest underweights are financials, consumer staples and utilities.

Fund Details