BlackRock Global Funds Audited Annual Report 31 August … · · 2017-12-29Asian Tiger Bond Fund 110 ... Latin American Fund 444 ... All Directors of BlackRock Global Funds are

Annual Report and Audited AccountsBlackRock Global Funds (BGF)R.C.S. Luxembourg: B.6317

2017 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, SO WHAT DO I DO WITH MY MONEY, INVESTING FOR A NEW WORLD, and BUILT FOR THESE TIMES are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. PRISMA 17/1529 BGF AR ENG 0817

+82 (0)2 751-0500 www.blackrock.com/kr

Want to know more?

31 AUGUST 2017

BlackR

ock Global Funds (B

GF)

31 AU

GU

ST 2017

Annual R

eport and Audited A

ccounts

[1]Annual Report and Audited Accounts

Contents

Subscriptions may be made only on the basis of the current Prospectus and relevant KIID for the Funds, together with the most recent annual report and audited accounts and interim report and unaudited accounts. Copies are available from the Investor Services Centre, the Transfer Agent, the Management Company or any of the Distributors.

Board of Directors 2

Management and Administration 2

General Information 3

Chairmans Letter to Shareholders 5

Investment Advisers Report 7

Directors Report 14

Report on Remuneration 18

Statement of Net Assets 21

Three Year Summary of Net Asset Values 27

Statement of Operations and Changes in Net Assets 55

Statement of Changes in Shares Outstanding 68

Portfolio of InvestmentsASEAN Leaders Fund 92Asia Pacific Equity Income Fund 94Asian Dragon Fund 97Asian Growth Leaders Fund 99Asian Multi-Asset Growth Fund 101Asian Tiger Bond Fund 110China Fund 117Continental European Flexible Fund 119Emerging Europe Fund 121Emerging Markets Bond Fund 123Emerging Markets Corporate Bond Fund 133Emerging Markets Equity Income Fund 136Emerging Markets Fund 139Emerging Markets Local Currency Bond Fund 141Euro Bond Fund 146Euro Corporate Bond Fund 160Euro Reserve Fund 169Euro Short Duration Bond Fund 171Euro-Markets Fund 181European Equity Income Fund 183European Focus Fund 185European Fund 187European High Yield Bond Fund 189European Special Situations Fund 195European Value Fund 198Fixed Income Global Opportunities Fund 200Flexible Multi-Asset Fund 270Global Allocation Fund 285Global Corporate Bond Fund 299Global Dynamic Equity Fund 315Global Enhanced Equity Yield Fund 324Global Equity Income Fund 328

Global Government Bond Fund 330Global High Yield Bond Fund 341Global Inflation Linked Bond Fund 361Global Long-Horizon Equity Fund 366Global Multi-Asset Income Fund 368Global Opportunities Fund 428Global SmallCap Fund 430India Fund 438Japan Flexible Equity Fund 440Japan Small & MidCap Opportunities Fund 442Latin American Fund 444Natural Resources Growth & Income Fund 446New Energy Fund 448North American Equity Income Fund 450Pacific Equity Fund 452Renminbi Bond Fund 454Strategic Global Bond Fund 457Swiss Small & MidCap Opportunities Fund(1) 473United Kingdom Fund 474US Basic Value Fund 475US Dollar Core Bond Fund 477US Dollar High Yield Bond Fund 507US Dollar Reserve Fund 524US Dollar Short Duration Bond Fund 526US Flexible Equity Fund 540US Government Mortgage Fund 542US Growth Fund 555US Small & MidCap Opportunities Fund 556World Agriculture Fund 558World Bond Fund 560World Energy Fund 575World Financials Fund 577World Gold Fund 579World Healthscience Fund 581World Mining Fund 583World Real Estate Securities Fund 585World Technology Fund 587

Notes to the Financial Statements 589

Audit Report 601

Appendix I Share Classes (Unaudited) 603

Appendix II Global Exposure and Leverage (Unaudited) 606

Appendix III Eligibility for French Plan dEpargne en Actions (PEA) (Unaudited) 610

Appendix IV Supplementary Information (Unaudited) 611

(1) Fund closed to subscriptions, see Note 1, for further details.

[2] BlackRock Global Funds (BGF)

Paul Freeman, Chairman (appointed effective 17 July 2017)Nicholas C.D. Hall, ex-Chairman (resigned effective 31 May 2017)Geoffrey D. RadcliffeFrancine KeiserBarry ODwyer (appointed effective 17 October 2016)Robert Hayes (appointed effective 17 October 2016)Alexander C. Hoctor-Duncan (resigned effective 6 October 2016)Bruno Rovelli (resigned effective 6 October 2016)Frank P. Le Feuvre (resigned effective 29 September 2017)

(1) All Directors of BlackRock Global Funds are non-executive Directors.(2) Geoffrey D. Radcliffe, Barry ODwyer and Robert Hayes are employees

of the BlackRock Group (of which the Management Company, Investment Advisers and Principal Distributor are part), and Paul Freeman is a former employee of the BlackRock Group.

(3) Francine Keiser is an independent Director.(4) Geoffrey D. Radcliffe was fulfilling Chairman duties from 31 May 2017 to 16 July 2017.

Management and Administration

Management CompanyBlackRock (Luxembourg) S.A.35A, avenue J.F. Kennedy, L-1855 Luxembourg,Grand Duchy of Luxembourg

Investment AdvisersBlackRock Financial Management, Inc.Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055, USA

BlackRock Investment Management, LLC100 Bellevue Parkway, Wilmington, Delaware 19809, USA

BlackRock Investment Management (UK) Limited12 Throgmorton Avenue, London EC2N 2DL, UK

BlackRock Singapore Limited# 18-01 Twenty Anson, 20 Anson Road, Singapore, 079912

Sub-Investment AdvisersBlackRock Asset Management North Asia Limited16/F Champion Tower, 3 Garden Road, Central, Hong Kong

BlackRock Japan Co. Limited1-8-3 Marunouchi, Chiyoda-ku, Tokyo 100-8217, Japan

BlackRock Investment Management (Australia) LimitedLevel 26, 101 Collins Street, Melbourne 3000, Australia

Principal DistributorBlackRock Investment Management (UK) Limited12 Throgmorton AvenueLondon EC2N 2DLUK

DepositaryThe Bank of New York Mellon (International) Limited Luxembourg Branch2-4, rue Eugne RuppertL-2453 LuxembourgGrand Duchy of Luxembourg

AdministratorThe Bank of New York Mellon (International) Limited Luxembourg Branch2-4, rue Eugne RuppertL-2453 LuxembourgGrand Duchy of Luxembourg

Transfer Agent and RegistrarJ.P. Morgan Bank Luxembourg S.A.European Bank & Business Center6, route de Trves, Building CL-2633 SenningerbergGrand Duchy of Luxembourg

AuditorPricewaterhouseCoopers, Socit cooprative2, rue Gerhard MercatorL-2182 LuxembourgGrand Duchy of Luxembourg

Legal AdvisersLinklaters LLP35 avenue John F. Kennedy, L-1855 LuxembourgGrand Duchy of Luxembourg

Listing AgentJ.P. Morgan Bank Luxembourg S.A.European Bank & Business Center6, route de Trves, Building CL-2633 SenningerbergGrand Duchy of Luxembourg

Securities Lending Agent BlackRock Advisors (UK) Limited 12 Throgmorton Avenue London EC2N 2DL UK

Paying AgentsA list of Paying Agents is to be found on pages 3 and 4.

Registered Office2-4, rue Eugne RuppertL-2453 LuxembourgGrand Duchy of Luxembourg

EnquiriesIn the absence of other arrangements, enquiries regarding the Company should be addressed as follows:Written enquiries:BlackRock Investment Management (UK) Limitedc/o BlackRock (Luxembourg) S.A.P.O. Box 1058L-1010 LuxembourgGrand Duchy of Luxembourg

All other enquiries:Telephone: + 44 207 743 3300Fax: + 44 207 743 1143Website: www.blackrockinternational.comEmail: [email protected]

Board of Directors(1)(2)(3)(4) Management and Administration continued

Board of DirectorsManagement and Administration


Current ProspectusThe Companys Prospectus dated 30 June 2016, addendum dated 13 July 2017 and second addendum dated 31 August 2017, and the relevant KIID for the Funds along with copies of the Account Opening and Dealing Form may be obtained from the Local Investor Services Centre, the Management Company or any of the Representatives or Distributors. Copies of the Companys Articles of Association and the Annual Report and Audited Accounts and Interim Report and Unaudited Accounts may also be obtained free of charge from any of these offices and from the Paying Agents. All these documents are also available from www.blackrockinternational.com

RepresentativesThe representative in Hong Kong is BlackRock Asset Management North Asia Limited, 16/F, Champion Tower, 3 Garden Road Central, Hong Kong.

The representative in Switzerland is BlackRock Asset Management Switzerland Limited, Bahnhofstrasse 39, 8001 Zurich, Switzerland.

The representative in Poland is Dubiski Fabrycki Jeleski i Wsplnicy, ul. Zielna 37, 00-108 Warszawa, Poland.

Authorised StatusThe Company is an Undertaking for Collective Investment in Transferable Securities (UCITS) under the Luxembourg law of 17 December 2010 as amended. Regulatory consents have been obtained or appropriate notifications have been made for the distribution of shares of the Companys Funds in the umbrella in the following countries:

Austria, Czech Republic, Denmark, Finland, France, Germany, Gibraltar, Hungary, Iceland, Ireland, Luxembourg, Netherlands, Norway, Poland, Slovakia, Spain, Sweden and the United Kingdom.

Regulatory consents have been obtained or appropriate notifications have been made for the distribution of shares of certain Funds in the umbrella in the following countries:

Belgium, Brunei, Chile, China, Greece, Hong Kong, Italy, Japan, Korea, Macau, Portugal, Singapore, Switzerland and Taiwan.

Shares of certain Funds in the umbrella may also be offered in Malta, Mauritius and Singapore by private placement.

The Company is duly registered with the Comisin Nacional de Mercado de Valores in Spain under number 140.

General Information

Paying AgentsAustriaRaiffeisen BankInternational AGAm Stadtpark 91030 Vienna

BelgiumJ.P. Morgan Chase Bank Brussels Branch1 Boulevard du Roi Albert IIBrusselsB1210 - Belgium

Czech RepublicUniCredit Bank Czech Republic and Slovakia, A.S.Prague 4 - Michle, Zeletavsk 1525/1,140 92, Czech Republic

FranceCACEIS Bank1/3, Place Valhubert 75013,Paris, France

Luxembourg(Central Paying Agent)J.P. Morgan BankLuxembourg S.A. European Bank & Business Center,6, route de Trves, Building CL-2633 SenningerbergGrand Duchy of Luxembourg

SwitzerlandState Street Bank International GmbH,Munich, Zurich branchBeethovenstrasse 19,CH-8027 Zurich,Switzerland

ItalyAllfunds Bank S.A. Succursale di MilanoVia Santa Margherita 720121 Milan

Banca Monte dei Paschi di Siena S.p.A.Piazza Salimbeni 353100 Siena

Banca Sella Holding S.p.A.Piazza Gaudenzio Sella 113900 Biella

BNP Paribas SecuritiesServicesSuccursale di MilanoVia Ansperto 520123 Milan

Italy continuedRBC Investor Services Bank S.A.Succursale di MilanoVia Vittor Pisani, 26I-20121 Milan

Socit Gnrale Securities Services S.p.A.Via Benigno Crespi, 19/A, MAC II20159 Milan

State Street Bank GmbH Succursale ItaliaRegistered OfficeVia Ferrante Aporti, 1020125 Milan

PolandDubiski Fabrycki Jeleski i Wsplnicy,ul. Zielna 37,00-108 WarszawaPoland

General Information


General Information continued

Paying Agents continuedUnited KingdomJ.P. Morgan Trustee and Depositary Company Limited UK Paying Agency3 Lochside ViewEdinburgh United KingdomEH12 9DH

GermanyJ.P. Morgan AGCIB/Investor Services - Trustee & FiduciaryTaunustor 1 (Taunus Turm)60310 Frankfurt am MainGermany

GibraltarHassans International Law Firm57/63 Line Wall RoadGibraltar

IrelandBlackRock Investment Management (Dublin) Limited, 1st Floor,2 Ballsbridge Park,Dublin 4,D04 YW83,Ireland

Mauritius Subsidiary

Directors Mauritian Auditor to the SubsidiaryCouldip Basanta Lala PricewaterhouseCoopersGeoffrey D. Radcliffe 18 Cybercity, Ebne, Rduit 72201Dilshaad Rajabalee (appointed effective 10 April 2017) Republic of MauritiusRobert Hayes (appointed effective 31 May 2017)Paul Freeman (appointed effective 29 September 2017)Kapildeo Joory (resigned effective 10 April 2017)Nicholas C.D. Hall (resigned effective 31 May 2017) Frank P. Le Feuvre (resigned effective 29 September 2017)

Indian Investment Adviser Investment ManagerDSP BlackRock Investment Managers Private Limited BlackRock Investment Management (UK) LimitedMafatlal Chambers, 10th Floor 12 Throgmorton AvenueNariman Point London EC2N 2DLMumbai - 400 021 United KingdomIndia

Mauritian AdministratorInternational Financial Services LimitedIFS Court, Bank StreetTwentyEight, CybercityEbne 72201Republic of Mauritius

Publication of Prices and Notices to ShareholdersNotices are sent to registered shareholders and (when legally required) published in such newspapers as decided by the Directors and in the Recueil des Socits et Associations in Luxembourg. The previous Dealing Days prices for shares may be obtained during business hours from the local Investor Service Centre and are also available from the BlackRock website. They will also be published in such countries as required under applicable law and at the discretion of the Directors in a number of newspapers worldwide. The Company cannot accept any responsibility for error or delay in the publication or non-publication of prices. Historic dealing prices for all shares are available from the Administrator or local Investor Services Centre.

Purchases and SalesA detailed list of investments purchased and sold for any Fund during the year is available upon request, free of charge, from the Registered office, or the offices of the Representatives as mentioned on the previous page.

Disclosure PolicyDetails of month end holdings and valuations for all BlackRock Global Funds will be made available upon request from the Investor Services Centre to any BlackRock Global Funds shareholder no earlier than 10 business days after a given month end. BlackRock Global Funds reserves the right to require shareholders to sign an appropriate non-disclosure document prior to providing such information.

The information stated in this report is historical and not necessarily indicative of future performance.


Chairmans Letter to Shareholders1 September 2016 to 31 August 2017

Dear Shareholder,

I am writing to update you on the activities of BlackRock Global Funds (BGF) over the twelve months to 31 August 2017.

The Funds performance is covered in more detail in the separate Investment Advisers report in which you will see that equity markets have moved significantly higher over the period, driven by more positive sentiment, higher economic growth and stronger company earnings.

Bond markets have been significantly more volatile as inflation expectations have revived and the prospect of higher interest rates has moved closer. Yields on the 10-year US treasury bond are around 0.5% higher than they were a year ago (https://www.bloomberg.com/quote/USGG10YR:IND), but this is below their peak in March of this year.

Although the election of Donald Trump as US President in November 2016 appeared to be the catalyst both for a rally in global stock markets and some early pull-back in global bond markets, earnings and economic data have proved more influential over the longer term, particularly as Trumps election promises on tax cuts and infrastructure spending proved slow to come to fruition. Economic strength in China, following further government stimulus has also played a role.

The Federal Reserve responded to improving growth and employment numbers with two quarter point rises in March and June in the Fed Funds rate, taking the level to 1.2%. Markets weathered this withdrawal of stimulus. At the time of writing, the Federal Reserve is signaling one more rate rise in 2017 and then a rise to 2% in 2018 and 3% in 2019. The weakening of the US Dollar since the start of 2017 (https://www.bloomberg.com/quote/DXY:CUR) has given the central bank more room to manoeuvre.

Investors have been quixotic in their preferences over the year. At times of safety, they have once again sought the stability of defensive companies, with stable, predictable earnings, cashflow and dividends that have dominated since the credit crisis. However, at times of greater confidence and in the latter part of the period under review they have sought out more economically sensitive areas, such as financials or resources, which should be greater beneficiaries of a re-inflationary environment.

In geographic terms, the US dominated for the early part of the period, led higher by a narrow group of large cap technology names. For international investors, returns were also turbo-charged by the strong US Dollar. The economic recovery was also more assured. However, US markets lost their lead in the second half, as investors started to question high valuations and other countries economic recoveries started to gather momentum.

In particular, Japan proved a stronger area. Its economy grew an impressive 4% annualised in the April to June quarter, its sixth consecutive quarter of positive growth. The Bank of Japan appears committed to doing what it takes to promote growth and the effects have been felt through the economy and the stock market. Performance has been particularly strong among domestically-focused small and mid cap stocks.

Europe appears to have put many of its political problems behind it. There was a relatively poor showing for populist parties in the French and Dutch elections and the emphatic triumph of Emmanuel Macron saw the European integration project on more stable ground at the end of the period than it had been at the start. German elections appear to be a foregone conclusion. The only area of real concern remains Italy, where the Five Star Movement continues to threaten the incumbent political parties.

The economic backdrop in the Eurozone has also improved markedly. The European Central Bank stimulus package appears to have worked to revive Europes stagnant banking system and get credit flowing around the system. Economic figures have been strong and for the peripheral countries as well as the core. Only Italy remains the laggard, with a banking system at breaking point, political inertia and a weakened economy. The strength of the European economies was increasingly reflected in the regions stock markets and, towards the end of the period, in a resurgent Euro.

For the UK, there was plenty of noise around Brexit the triggering of Article 50, the role of parliament and the final deal sought by the UK government. The UK stock market lagged its peers, in spite of its international flavour. However, the brunt of the Brexit volatility was borne by Sterling, which continued to weaken over the period, particularly against the Euro.

Emerging markets also saw a significant recovery over the period, notwithstanding a short term sell-off following the election of Donald Trump as investors fretted about the impact of increased protectionism on developing market economies. Chinas stimulus helped, encouraging intra-emerging market trade. At the same time, Brazil put a lot of its economic concerns behind it, in spite of ongoing political wobbles. India has emerged from a challenging 12 months, which saw an ambitious demonetisation plan and reform of the countrys goods and services tax.

Bond markets continued to appear to be in the dying days of their near three decade long bull market, while at the same time refusing to roll over. In the early part of the period, yields saw a significant spike, responding to a new environment where deflation is no longer a risk and interest rates look set to rise. However, as it became increasingly clear that inflation was perhaps not as much of a threat as thought, yields began to gently move lower again. There are still significant deflationary forces at work high debt, an ageing population, low business investment.

Chairmans Letter to Shareholders



Chairmans Letter to Shareholders1 September 2016 to 31 August 2017 continued

Regulatory change continued throughout Europe and a number of these future changes could have implications for investors.

} Revisions to the Markets in Financial Instruments Directive (MiFID II) and the new Markets in Financial Instruments Regulation (MiFIR): the revised directive and new regulation have been finalised and are due to come into effect at the beginning of 2018. Requirements being introduced include restrictions on how financial advisers may be remunerated which could result in advisers amending their services.

} Packaged Retail Investment and Insurance-based Investment Products (PRIIPs): The European Parliament voted to reject the current regulatory technical standards proposed for the Key Investor Information Document (KIID). The Commission and Council will now discuss and redraft the standards. The start date has been delayed to 2018.

The assets under management (AUM) in the BGF range increased from US$128.65bn to US$144.12bn over the period, as strong inflows into the Asian, emerging market and global multi-asset funds was offset by weakness in the European funds.

Asian and emerging markets focused funds generally fared well as investors concluded that higher global economic growth might compensate for the Trump effect and took advantage of lower valuations: The Asian Growth Leaders Fund saw strong growth, up 112% to US$2.91bn. Assets in the Asian Dragon Fund rose 96% to US$4.23bn.

Emerging market bond and equity funds also proved popular. Assets in the Emerging Markets Bond Fund and Emerging Markets Corporate Bond Fund rose 50% and 28% respectively to US$3.92bn and US$165.55m. Assets in the Emerging Markets Local Currency Bond Fund rose 186% to US$4.63bn. The Emerging Markets Fund saw inflows of 31% to US$656.61m.

Assets in the Global Multi-Asset Income Fund rose 88% to US$7.38bn.

Financial and natural resources funds benefited significantly from the reflation trade at various points during the year. This was reflected in inflows into a number of our sector funds. The World Financials Fund, for example, saw assets rise 188% to US$727.21m.

The European funds were a weak spot in spite of an easing in political tensions. The European Equity Income, European Focus Fund and European Fund lost 24%, 49% and 26% of their assets respectively.

In spite of volatility in global bond markets, the demand for fixed income funds remained robust. The Fixed Income Global Opportunities Fund (FIGO) saw assets rise over the period to US$9.27bn. The Global Government Bond Fund was largely flat over the period.

The Asian Local Bond Fund was terminated on 29 June 2017.

Should you have any questions on any of this material, please contact us via our website: www.blackrockinternational.com or via email: [email protected].

Yours faithfully,

Paul FreemanChairman

September 2017



Investment Advisers ReportPerformance overview1 September 2016 to 31 August 2017

Market ReviewAsset class performance over the last six months has been dominated by rising expectations of inflation. This has seen equity markets move higher at the same time as there has been volatility in bond markets.

After an immediate rally following the election of Donald Trump in November, markets have been in a relatively narrow trading range since the start of the summer even if the overall move has been higher. There has been increasing caution over the mounting geopolitical tension on North Korea.

Following some indecision from investors, leadership in markets has been firmly grasped by those companies with more exposure to economic growth banks, resource companies, and away from expensive defensives. This has also been a function of earnings cyclical companies have been outpacing their defensive counterparts on revenue and profits growth. Equally, geographic leadership appears to have moved away from the US and into countries at an earlier stage of their recovery cycle Europe, emerging markets and Japan, for example.

Bond prices continue to show surprising resilience, in spite of a general trend towards tighter monetary policy. More recently, bond yields have risen, but to date, those rises have been gradual. There is increased volatility in bond markets, however, which may deter investors looking for safer assets.

Fund PerformancePerformance data stated is for the main (A) share class of the relevant Fund, stated in the base currency of the Fund, net of fees and expenses.

Equity Fund PerformanceGlobal equities climbed steadily higher over the period. The US lead the way for the first six months, but leadership shifted in the second half. The Global Equity Income Fund rose 8.65%, behind its benchmark, the MSCI All Country World Net TR Index, which rose by 17.11%. The Global Opportunities Fund rose 13.90%, also trailing its MSCI All Country World Net TR Index benchmark, which rose 17.11%.

Shares of small and medium sized companies were relatively strong across the full year, as investors saw them as natural beneficiaries of a stronger economic climate. The Global SmallCap Fund rose 12.16%, behind its benchmark, the MSCI AC World Small Cap Index, which rose 16.89%. Of the individual country funds, the Japan Small & MidCap Opportunities Fund was particularly strong after a period of weakness, rising 30.92%, ahead of the S&P Japan Mid Small Cap Index, which rose 29.78%. The Swiss Small & MidCap Opportunities Fund registered a gain of 30.57%, building on its strength in the previous six months, compared to 22.11% for its benchmark, the Switzerland SPI Extra Index. The US Small & MidCap Opportunities Fund rose by 7.00%, underperforming the S&P US Mid Small Cap Index, which was up by 13.53%.

European equities accelerated in the second half of the year as political risk dissipated and the huge quantitative easing (QE) programme helped to stimulate economic growth. The Continental European Flexible Fund rose by 16.22%, behind the FTSE World Europe ex UK Index, which rose by 23.97%. The European Value Fund benefited from the broader market move to value strategies, rising 9.80%. This was behind the MSCI Europe Value Index, which rose 15.54%. The European Equity Income Fund rose by 7.40%. This was significantly behind the MSCI Europe Index, its benchmark, which rose 11.88%. The European Focus Fund was up 6.30% while the European Special Situations Fund rose by 11.55%. Both are benchmarked to the MSCI Europe Index, which rose 11.88%.

Funds with a focus on US equities sustained their strength through the year. The US Growth Fund produced a positive return of 20.33%, ahead of the Russell 1000 Growth Index, which was up 13.18%. The US Basic Value Fund rose by 4.60% underperforming the Russell 1000 Value Index, which was up by 11.58% over the period.

Japanese funds did particularly well over the period as the economy improved and the yen weakened. The Japan Flexible Equity Fund rose 24.74%, ahead of the MSCI Japan Index, which rose 20.98%.

Performance across emerging markets funds was initially held back by the election of Donald Trump, but recovered considerably at the start of 2017. Asia was a notable area of strength. The Asian Growth Leaders Fund rose 23.99% just behind its benchmark, the MSCI All Country Asia ex Japan Index, which rose 24.83%. The Asian Dragon Fund rose 21.68% (against the same benchmark).

The India Fund rose 16.48%, against its MSCI India Index benchmark performance of 17.46%. The Emerging Markets Fund, which has a more broad exposure across the emerging markets investment universe, rose by 22.84%, behind the benchmark MSCI Emerging Markets Index, which was up by 24.53%. The Emerging Markets Equity Income Fund, which shares the same benchmark, was up 23.90%. The Latin American Fund rose 20.04%, slightly behind its benchmark, the MSCI Emerging Markets Latin America Index, which rose 22.63%. The Emerging Europe Fund rose 24.05%, well ahead of its benchmark, the MSCI Emerging Markets Europe 10/40 Index, which rose 20.90% over the period.

In natural resources, the New Energy Fund was hit by the wider recovery in the resources sector, rising 13.43%. The Fund has no benchmark. The World Mining Fund rose 31.89% underperforming its benchmark, the Euromoney Global Mining Constrained Weights Net Total Return Index, which was up by 34.27%. The World Agriculture Fund rose by 3.99% behind its benchmark, the DAX Global Agribusiness Index, which was up by 9.95%. The World Gold Fund fell 7.30%, ahead of its benchmark, the FTSE Gold Mines Index, which fell 9.11%.

Investment Advisers Report



Investment Advisers ReportPerformance overview1 September 2016 to 31 August 2017 continued

Among specialist strategies, the World Real Estate Securities Fund rose 0.52%, outperforming its benchmark, FTSE EPRA/NAREIT Developed Index, which was down 0.10%.

Mixed Asset Fund PerformanceThe diversified Global Allocation Fund which invests in a mixture of fixed income securities, equities and cash gained 9.32% behind its reference benchmark, which rose by 9.78% (the benchmark comprises 36% S&P 500 Index, 24% FTSE World (Ex-US) Index, 24% 5yr US Treasury Note, 16% Citigroup Non-USD World Government Bond Index). The Global Dynamic Equity Fund gained 16.63%, behind its reference benchmark, which rose by 17.30% (the benchmark comprises 60% S&P 500 Index/40% FTSE World (ex US) Index).

The Flexible Multi-Asset Fund rose by 4.25%, a little ahead of its reference benchmark the 50% MSCI World Index, 50% Citigroup World Government Bond Euro Hedged Index, which was up 3.05%. The Fund invests in an actively-managed portfolio of global equities and bonds, with some tactical exposure to alternative assets and specialist markets.

The Global Multi-Asset Income Fund rose by 6.72% over the period behind its reference benchmark, which rose 8.71% (the benchmark comprises 50% MSCI World Index, 50% Bloomberg Barclays Global Aggregate Bond Index USD Hedged). The Fund combines the ability to allocate actively across a full range of asset classes and geographies at a top-down level with a focus on adding value through bottom-up security selection by specialist teams in each key asset class.

Fixed Income Fund PerformanceIn fixed income, higher risk asset classes, such as emerging market and high yield debt, generally did better over the period under review. The Global Government Bond Fund fell 0.42%, marginally ahead of its benchmark, the Citigroup World Government Bond USD Hedged Index, which fell 0.82%. The Euro Corporate Bond Fund rose 1.04%, compared to a rise of 0.61% for its benchmark, the BofA Merrill Lynch Euro Corporate Index. The Global Corporate Bond Fund rose 1.27%, compared to a rise of 2.32% for its benchmark, the Bloomberg Barclays Global Aggregate Corporate Bond USD Hedged Index.

The Euro Bond Fund fell 1.34%, against a fall in its benchmark, the Bloomberg Barclays Euro-Aggregate 500mm+ Bond Index, of 1.81%. The Euro Short Duration Bond Fund rose 0.44%, against a rise of 0.03% for its benchmark, the Bloomberg Barclays Eur Aggregate 500mm 1-3 yr Index.

The Global High Yield Bond Fund rose 7.91%, against a rise in its benchmark, the BofA Merrill Lynch Global High Yield Constrained USD Hedged Index, of 8.88%. The Emerging Markets Local Currency Bond Fund rose 9.62% over the period, ahead of its benchmark, the JP Morgan GBI-EM Global Diversified Index, which rose 2.92%. The broader Emerging Markets Bond Fund rose 4.79%, compared to a rise

of 5.02% for its benchmark, the JP Morgan Emerging Markets Bond Index Global Diversified Index.

Asian bonds were weaker than other emerging market bonds with the Asian Tiger Bond Fund up 2.89% against a rise of 2.41% for its benchmark, the JP Morgan Asia Credit Index.

The Fixed Income Global Opportunities Fund delivered a positive absolute return of 3.90%. The fund has no benchmark.

OutlookFinancial markets were more tentative towards the end of the period, as geopolitical threats weighed on sentiment. Investors will watch the situation in North Korea carefully to determine whether the threat is significantly high to destabilise markets.

Barring a catastrophic escalation of this crisis, most eyes will be on central bankers, and whether they raise interest rates. For the time being, while inflation seems to be under control, interest rates rises are likely to be slow, and data-driven. One of the biggest risks to markets remains a speedy rise in rates.

Markets have largely dismissed the prospect of meaningful policy change under the Trump administration. Many have pointed out that he does not have the fiscal headroom of, say, President Reagan and therefore lacks the capacity for significant tax cuts or infrastructure spending. If he does manage to get some changes through Congress, it may be positive for markets, but they have ceased to expect it.

There are risks to valuations in some areas. For the time being, expensive valuations in areas such as technology have been largely supported by strong earnings, but there may be vulnerabilities if the economic outlook were to weaken.

Politics continues to be a source of fragility. In the UK, there has been little progress on the Brexit negotiations, with both sides locked into apparently immovable positions. In Spain, Catalan cessation remains a real risk for the Madrid government. At the moment, both these difficulties remain isolated but have the potential to spread more widely.

That said, there is still much to cheer in the global economy. For the time being, inflation remains muted and central banks are under little pressure to raise rates. Government and consumer debt levels are high, and this is likely to dampen economic activity and inflationary pressures, which should prevent any significant sell-off in bond markets. For the time being, we see this as a relatively benign backdrop for asset prices.

September 2017




Disclosed in the table below are the performance returns for the A Class Non-Distributing Share Class for each Fund, net of fees and expenses, which has been selected as a representative Share Class. Performance returns for any other Share Class can be made available on request.

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 an investment and the income from it will vary and the initial investment amount cannot be guaranteed. The Fund invests a large portion of assets which are denominated in currencies other than US dollar; 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, as well as Key Investor Information Documents (KIIDs). Copies are available from Investor Services, the Transfer Agent, the Management Company or any of the Representatives or Distributors. The BGF range is only available for investment by non-US persons. It is not offered for sale or sold in the US, its territories or possessions.

The Funds are not registered for sale to the public in all jurisdictions. Further details on distribution of shares of the Funds are included in the Authorised Status on page 3.

Performance for the year

ended 31 August Calendar Year Performance

Performance for the 10 year

period ended 31 August

2017 2016 2015 2014 2017 Launch Date

ASEAN Leaders Fund A Non Dist (USD) 10.52% 7.89% -19.07% 3.76% 8/8/2012

MSCI South-East Asia Index (Net) (USD) 10.51% 5.98% -18.52% 6.22%

Asia Pacific Equity Income Fund A Non Dist (USD) 17.05% 7.94% -10.62% 4.60% 18/9/2009

MSCI All Country Asia Pacific ex Japan Index (Net) (USD) 23.18% 6.75% -9.37% 2.82%

Asian Dragon Fund A Non Dist (USD) 21.68% 8.24% -5.04% 5.72% 44.84% 2/1/1997

MSCI All Country Asia ex Japan Index (Net) (USD) 24.83% 5.44% -9.17% 4.80% 52.18%

Asian Growth Leaders Fund A Non Dist (USD) 23.99% 6.40% 0.98% 9.46% 31/10/2012

MSCI All Country Asia ex Japan Index (Net) (USD) 24.83% 5.44% -9.17% 4.80%

Asian Local Bond Fund A Non Dist (USD)(1) -1.71% 0.21% -3.88% 3.51% 30/4/2012

Markit iBoxx ALBI Index - 1.77% -3.17% 4.36%

Asian Multi-Asset Growth Fund A Non Dist (USD) 12.05% 20/1/2016

Reference (50% MSCI Asia ex Japan Index/25% JP Morgan Asia Credit Index/25% Markit iBoxx ALBI Index)

12.69%

Asian Tiger Bond Fund A Non Dist (USD) 2.89% 4.70% 2.28% 8.19% 83.03% 2/2/1996

JP Morgan Asian Credit Index (USD) 2.41% 5.81% 2.80% 8.32% 92.59%

China Fund A Non Dist (USD) 27.36% 5.15% -2.58% 14.61% 24/6/2008

MSCI China 10/40 Index (Net) (USD) 32.26% 0.43% -8.01% 8.38%

Continental European Flexible Fund A Non Dist (EUR) 16.22% -2.68% 20.78% 5.13% 129.62% 24/11/1986

FTSE World Europe ex UK Index (EUR) 23.97% 0.35% -0.42% -5.71% 43.35%

Emerging Europe Fund A Non Dist (EUR) 24.05% 25.15% 0.26% -14.31% -14.38% 29/12/1995

MSCI Emerging Markets Europe 10/40 Index (Net) (EUR) 20.90% 29.46% -4.99% -19.74% -17.04%

Emerging Markets Bond Fund A Non Dist (USD) 4.79% 12.56% -1.63% 5.63% 89.95% 1/10/2004

JP Morgan Emerging Markets Bond Index Global Diversified Index (USD)

5.02% 10.15% 1.18% 7.43% 113.17%

Emerging Markets Corporate Bond Fund A Non Dist (USD) 4.70% 9.74% -0.49% 2.74% 18/2/2013

JP Morgan Corporate Emerging Markets Bond Index Broad Diversified

5.61% 9.65% 1.30% 4.96%

(1) Fund termination, see Note 1, for further details.








2017 2016 2015 2014 2017 Launch Date

Emerging Markets Equity Income Fund A Non Dist (USD) 23.90% 13.25% -15.84% -2.93% 12/8/2011

MSCI Emerging Markets Index (Net) (USD) 24.53% 11.19% -14.92% -2.19%

Emerging Markets Fund A Non Dist (USD) 22.84% 8.08% -19.34% -2.07% 16.44% 30/11/1993

MSCI Emerging Markets Index (Net) (USD) 24.53% 11.19% -14.92% -2.19% 27.08%

Emerging Markets Local Currency Bond Fund A Non Dist (USD) 9.62% 12.99% -14.17% -6.92% 9.05% 2/2/2007

JP Morgan GBI-EM Global Diversified Index (USD) 2.92% 13.23% -5.23% 7.37% 32.99%

Euro Bond Fund A Non Dist (EUR) -1.34% 3.12% 1.51% 11.40% 65.78% 31/3/1994

Bloomberg Barclays Euro-Aggregate 500mm+ Bond Index (EUR) -1.81% 3.31% 1.00% 11.11% 60.10%

Euro Corporate Bond Fund A Non Dist (EUR) 1.04% 4.86% 0.39% 7.78% 52.26% 31/7/2006

BofA Merrill Lynch Euro Corporate Index (EUR) 0.61% 4.75% 0.43% 8.25% 58.17%

Euro Reserve Fund A Non Dist (EUR) -0.43% -0.30% -0.50% 0.05% 24/7/2009

7 Day Euro LIBID (EUR) -0.52% -0.49% -0.26% -0.05%

Euro Short Duration Bond Fund A Non Dist (EUR) 0.44% 0.57% 0.70% 2.41% 33.61% 4/1/1999

Bloomberg Barclays Eur Aggregate 500mm 1-3yr (EUR) 0.03% 0.58% 0.58% 1.79% 30.18%

Euro-Markets Fund A Non Dist (EUR) 14.53% -0.83% 21.75% -4.39% 52.40% 4/1/1999

MSCI EMU Index (Net) (EUR) 17.01% 4.37% 9.81% 4.32% 17.32%

European Equity Income Fund A Non Dist (EUR) 7.40% -6.93% 15.52% 12.12% 3/12/2010

MSCI Europe Index (Net) (EUR) 11.88% 2.58% 8.22% 6.84%

European Focus Fund A Non Dist (EUR) 6.30% -6.55% 12.57% 4.65% 50.95% 14/10/2005

MSCI Europe Index (Net) (EUR) 11.88% 2.58% 8.22% 6.84% 29.80%

European Fund A Non Dist (EUR) 8.07% -5.60% 10.97% 2.58% 35.94% 30/11/1993


European High Yield Bond Fund A Non Dist (EUR) 6.62% 7.00% 23/7/2015

Bloomberg Barclays Pan European High Yield 3% Issuer Constrained Index EUR Hedged (EUR)

6.95% 9.02%

European Special Situations Fund A Non Dist (EUR) 11.55% -7.12% 25.76% 6.80% 94.49% 14/10/2002


European Value Fund A Non Dist (EUR) 9.80% -0.35% 13.09% 5.04% 42.59% 8/1/1997

MSCI Europe Value Index (Net) (EUR) 15.54% 7.41% 0.65% 5.59% 6.53%

Fixed Income Global Opportunities Fund A Non Dist (USD) 3.90% 2.44% -0.91% 3.52% 36.42% 31/1/2007

No Index. Absolute Return Style Fund. -

Flexible Multi-Asset Fund A Non Dist (EUR) 4.25% 0.87% 1.32% 10.33% 30.67% 4/1/1999

Reference (50% MSCI World Index/50% Citigroup World Government Bond Euro Hedged Index) (EUR)

3.05% 6.63% 5.97% 13.84% 70.57%

Global Allocation Fund A Non Dist (USD) 9.32% 3.24% -2.27% 1.60% 44.88% 3/1/1997

Reference (36% S&P 500 Index/24% FTSE World Index (Ex-US) Index/24% 5yr US Treasury Note/16% Citigroup Non-USD World Government Bond Index) (USD)

9.78% 6.06% -0.78% 4.17% 65.32%

Global Corporate Bond Fund A Non Dist (USD) 1.27% 4.36% -1.59% 7.33% 19/10/2007

Bloomberg Barclays Global Aggregate Corporate Bond USD Hedged Index (USD)

2.32% 6.22% -0.24% 7.60%

Global Dynamic Equity Fund A Non Dist (USD) 16.63% 5.41% -2.22% 3.87% 52.35% 28/2/2006

Reference (60% S&P 500 Index/40% FTSE World (ex US) Index) (USD)

17.30% 9.13% -0.82% 6.44% 71.84%








2017 2016 2015 2014 2017 Launch Date

Global Enhanced Equity Yield Fund A Non Dist (USD) 11.13% 5.04% -4.56% 6.28% 18.74% 13/10/2006

MSCI All Country World Index Minimum Volatility (Net) (USD) 9.47% 7.43% 2.76% 10.95% 50.06%

Global Equity Income Fund A Non Dist (USD) 8.65% 4.31% 0.50% 2.03% 12/11/2010

MSCI All Country World Index (Net) (USD) 17.11% 7.86% -2.36% 4.16%

Global Government Bond Fund A Non Dist (USD) -0.42% 2.87% 0.07% 7.83% 42.69% 13/5/1987

Citigroup World Government Bond USD Hedged Index (USD) -0.82% 3.75% 1.30% 8.35% 50.25%

Global High Yield Bond Fund A Non Dist (USD) 7.91% 12.22% -4.67% 1.63% 71.62% 8/6/2007

BofA Merrill Lynch Global High Yield Constrained USD Hedged Index (USD)

8.88% 16.21% -2.03% 2.53% 124.77%

Global Inflation Linked Bond Fund A Non Dist (USD) -0.76% 8.83% -1.66% 8.17% 19/6/2009

Bloomberg Barclays World Government Inflation-Linked Bond Index (USD)

0.43% 10.22% -1.12% 9.04%

Global Long-Horizon Equity Fund A Non Dist (USD) 10.73% 19/7/2016

MSCI All Country World Index (Net) (USD) 17.11%

Global Multi-Asset Income Fund A Non Dist (USD) 6.72% 5.34% -2.35% 4.11% 28/6/2012

Reference (50% MSCI World Index/50% Bloomberg Barclays Global Aggregate Bond Index USD Hedged) (USD)

8.71% 6.37% 0.30% 6.34%

Global Opportunities Fund A Non Dist (USD) 13.90% 2.83% -1.44% -3.36% 40.39% 29/2/1996

MSCI All Country World Index (Net) (USD) 17.11% 7.86% -2.36% 4.16% 45.96%

Global SmallCap Fund A Non Dist (USD) 12.16% 7.11% -6.67% 0.67% 57.13% 4/11/1994

MSCI All Country World Index Small Cap Index (USD) 16.89% 11.59% -1.04% 1.81% 67.08%

India Fund A Non Dist (USD) 16.48% 1.75% -0.99% 39.02% 53.18% 2/2/2005

MSCI India Index (USD) 17.46% -1.43% -6.12% 23.87% 36.15%

Japan Flexible Equity Fund A Non Dist (JPY) 24.74% -3.10% 7.64% 5.36% -1.91% 28/2/2005

MSCI Japan Index (Net) (JPY) 20.98% -0.74% 9.93% 9.48% 12.66%

Japan Small & MidCap Opportunities Fund A Non Dist (JPY) 30.92% 1.44% 8.75% 10.34% 31.45% 13/5/1987

S&P Japan Mid Small Cap Index (JPY) 29.78% 3.65% 13.40% 14.66% 54.43%

Latin American Fund A Non Dist (USD) 20.04% 24.96% -30.68% -9.41% -7.92% 8/1/1997

MSCI Emerging Markets Latin America Index (Net) (USD) 22.63% 31.04% -31.04% -12.30% 2.51%

Natural Resources Growth & Income Fund A Non Dist (USD) 8.76% 32.13% -24.88% -8.46% 15/4/2011

S&P Global Natural Resources Index (USD) 18.72% 31.46% -24.50% -10.18%

New Energy Fund A Non Dist (USD) 13.43% 1.32% -2.82% -3.11% -28.86% 6/4/2001

The Fund has no benchmark

North American Equity Income Fund A Non Dist (USD) 12.72% 13.92% -2.53% 8.88% 9/3/2012

S&P 500 Index (Net) (USD) 15.51% 11.23% 0.75% 13.03%

Pacific Equity Fund A Non Dist (USD) 17.20% 1.67% -2.39% -1.15% 29.63% 5/8/1994

MSCI All Country Asia Pacific Index (Net) (USD) 19.41% 4.89% -1.96% 0.00% 37.50%

Renminbi Bond Fund A Non Dist (CNH) 5.49% 4.47% 3.77% 3.78% 11/11/2011

Markit iBoxx ALBI China Offshore Index 2.42% 4.65% 3.19% 3.02%

Strategic Global Bond Fund A Non Dist (USD) 0.89% 21/7/2016

Reference (Bloomberg Barclays 80% Global Aggregate ex EM Index/20% EM ex Korea Index)

1.24%

Swiss Small & MidCap Opportunities Fund A Non Dist (CHF)(2) 30.57% 12.09% 14.91% 13.60% 8/1/2008

Switzerland SPI Extra Index (CHF) 22.11% 8.50% 11.01% 11.37% (2) Fund closed to subscriptions, see Note 1, for further details.







2017 2016 2015 2014 2017 Launch Date

United Kingdom Fund A Non Dist (GBP) 14.04% 7.07% 10.52% -0.40% 71.35% 31/12/1985

FTSE All-Share Index (GBP) 14.33% 16.75% 0.98% 1.18% 79.23%

US Basic Value Fund A Non Dist (USD) 4.60% 16.41% -8.39% 9.27% 43.66% 8/1/1997

Russell 1000 Value Index (USD) 11.58% 17.34% -3.83% 13.45% 78.47%

US Dollar Core Bond Fund A Non Dist (USD) 0.75% 2.19% -0.56% 6.08% 43.87% 7/4/1989

Bloomberg Barclays US Aggregate Index (USD) 0.49% 2.65% 0.55% 5.97% 53.85%

US Dollar High Yield Bond Fund A Non Dist (USD) 7.81% 13.19% -5.00% 1.60% 80.76% 29/10/1993

Bloomberg Barclays US High Yield 2% Constrained Index (USD) 8.62% 17.13% -4.43% 2.46% 113.96%

US Dollar Reserve Fund A Non Dist (USD) 0.58% 0.21% 0.00% 0.01% -1.10% 30/11/1993

7 Day USD LIBID (USD) 0.69% 0.29% 0.04% 0.00% 8.23%

US Dollar Short Duration Bond Fund A Non Dist (USD) 1.54% 1.33% 0.31% 1.11% 17.78% 31/10/2002

BoA ML 1-3 Year US Corporate & Government Index (USD) 0.88% 1.29% 0.67% 0.78% 24.07%

US Flexible Equity Fund A Non Dist (USD) 20.46% 8.37% -1.39% 12.02% 62.27% 31/10/2002

Russell 1000 Index (USD) 16.16% 12.05% 0.92% 13.24% 110.48%

US Government Mortgage Fund A Non Dist (USD) -0.21% 0.98% 0.44% 5.59% 39.06% 2/8/1985

Citigroup Mortgage Index (USD) 0.81% 1.59% 1.56% 6.12% 51.89%

US Growth Fund A Non Dist (USD) 20.33% -1.20% 4.54% 9.23% 65.44% 30/4/1999

Russell 1000 Growth Index (USD) 13.18% 10.28% 17.70% 28.74% 181.35%

US Small & MidCap Opportunities Fund A Non Dist (USD) 7.00% 5.87% -2.55% 11.75% 85.65% 13/5/1987

S&P US Mid Small Cap Index (USD) 13.53% 15.67% -2.38% 10.26% 119.07%

World Agriculture Fund A Non Dist (USD) 3.99% 9.17% -14.04% 3.02% 9/2/2010

DAX Global Agribusiness Index (USD) 9.95% 13.17% -12.72% 1.03%

World Bond Fund A Non Dist (USD) 0.03% 2.67% -0.18% 7.15% 45.27% 4/9/1985

Bloomberg Barclays Global Aggregate USD Hedged Index (USD) 0.28% 3.95% 1.02% 7.59% 53.85%

World Energy Fund A Non Dist (USD) -8.18% 27.48% -29.91% -15.37% -40.44% 6/4/2001

MSCI World Energy 10/40 Index (Net) (USD) 0.54% 27.83% -23.46% -11.85% -5.65%

World Financials Fund A Non Dist (USD) 37.65% 6.47% -7.63% 0.83% -2.33% 3/3/2000

MSCI All Country World Index Financials Index (Net) (USD) 26.22% 12.38% -5.59% 4.17% 0.41%

World Gold Fund A Non Dist (USD) -7.30% 50.92% -21.88% -5.19% -17.37% 30/12/1994

FTSE Gold Mines Index (Cap) (USD) -9.11% 64.37% -12.47% -3.43% -18.44%

World Healthscience Fund A Non Dist (USD) 10.83% -8.02% 4.56% 24.40% 154.87% 6/4/2001

MSCI World Health Care Index (Net) (USD) 10.77% -6.81% 6.60% 18.10% 135.03%

World Mining Fund A Non Dist (USD) 31.89% 52.34% -41.35% -23.08% -49.88% 24/3/1997

Euromoney Global Mining Constrained Weights Net Total Return Index (USD)

34.27% 66.93% -41.08% -16.77% -25.26%

World Real Estate Securities Fund A Non Dist (USD) 0.52% 1.37% 0.65% 20.41% 25/2/2013

FTSE EPRA/NAREIT Developed Index -0.10% 4.06% -0.79% 15.02%

World Technology Fund A Non Dist (USD) 37.51% 5.92% 3.99% 8.13% 100.53% 3/3/1995

MSCI All Country World Information Technology Index (Net) (USD)

31.99% 12.20% 3.20% 15.20% 135.55%




Fund Performance & Benchmark InformationUnless otherwise stated, performance is shown on a NAV price basis with income reinvested. Fund performance figures are calculated net of annual fees and expenses. All fund and index information is recorded in its base currency and is converted into the appropriate currency.



Directors Report

Corporate Governance Statement

IntroductionBlackRock Global Funds (the Company) is a public limited company (socit anonyme) established under the laws of the Grand Duchy of Luxembourg as an open ended variable capital investment company (socit dinvestissement capital variable). The Company has been authorised by the Commission de Surveillance du Secteur Financier (the CSSF) as an undertaking for collective investment in transferable securities (UCITS) pursuant to the provisions of Part I of the law of 17 December 2010, as amended from time to time and is regulated pursuant to such law. The Company complies with the principles set out in the Association of the Luxembourg Fund Industry (ALFI) Code of Conduct Revision 2013 (the Code) issued by ALFI in June 2013.

The Board of Directors of the Company (the Board) is committed to maintaining the highest standards of corporate governance and is accountable to shareholders for the governance of the Companys affairs. The Board has considered the principles and recommendations of the Code and has put in place a framework for corporate governance which it believes is appropriate for adherence to the principles of the Code given the nature of its structure as an Investment Company. This statement summarises the corporate governance structure and processes in place for the Company for the period under review from 1 September 2016 to 31 August 2017.

Board Composition The Board currently consists of five non-executive Directors, (including one independent Director). The Board is committed to maintaining an appropriate balance of skills, experience, independence and knowledge amongst its members.

The Directors biographies, on pages 16 and 17, collectively demonstrate a breadth of investment knowledge and experience, business and financial skills and legal and regulatory familiarity which enables them to provide effective strategic leadership, oversight and proper governance of the Company. BlackRock considers the current compositions to be a suitable and appropriate balance for the Board.

Article 13 of the Companys Articles of Incorporation, in accordance with Luxembourg law, provides that Directors shall be elected by the shareholders at their annual general meeting for a period ending at the next annual general meeting and until their successors are elected. Any Director who resigns his/her position is obliged to declare to the Board and the CSSF whether the resignation is connected with any issues with or claims against the Company.

The Board supports a planned and progressive renewal of the Board. BlackRock is committed to ensuring that Directors put forward for election by the shareholders possess the skills needed to maintain this balance. The Board is committed to carrying out an annual review of its performance and activities.

The Directors have a continuing obligation to ensure they have sufficient time to discharge their duties. The details of each Directors (including the Chairman), other appointments and

commitments are made available to the Board and BlackRock Investment Management (U.K.) Limited (BIM UK) for inspection. All new appointments or significant commitments require the prior approval of BIM UK.

Before a new Director is proposed to the shareholders for appointment he or she will receive a full induction incorporating relevant information regarding the Company and his or her duties and responsibilities as a Director. In addition, a new Director is required to spend some time with representatives of BIM UK so that the new Director will become familiar with the various processes which are considered necessary for the proper performance of his or her duties and responsibilities to the Company.

The Companys policy is to encourage Directors to keep up to date with developments relevant to the Company. The Directors have attended and will continue to attend updates and briefings run by BIM UK and affiliated entities in the U.S. and elsewhere. The Directors also receive regular briefings from, amongst others, the auditors, investment strategists, risk specialists, depositary and legal advisers regarding any proposed product developments or changes in laws or regulations that could affect the Company.

Boards ResponsibilitiesThe Board meets at least quarterly and also on an ad hoc basis as required. The Board is supplied with information in a timely manner and in a form and of a quality appropriate to enable it to discharge its duties. The Board is responsible for the long-term success of the Company and recognises its responsibility to provide leadership, direction and control to the Company within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board reserves to itself decisions relating to the determination of investment policy and objectives, any change in investment strategy and entering into any material contracts. The Board also approves the prospectus and any addenda to it, circulars to shareholders, financial statements and other relevant legal documentation.

The Chairmans main responsibility is to lead and manage the Board, encourage critical discussions and promote effective communication within the Board. In addition, he is responsible for promoting best practice corporate governance and effective communication with shareholders.

The Directors have access to the advice and services of external counsel and the resources of BIM UK and BlackRock (Luxembourg) S.A. (the Management Company) should they be needed. Where necessary, in the furtherance of their duties, the Board and individual Directors may seek independent professional advice. The Board has responsibility for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable it to ensure that the financial statements comply with relevant accounting standards. It is the Boards responsibility to present a balanced and understandable assessment of the Companys financial position, which extends to interim financial statements and other reports made available to shareholders and the public. The Board is

Directors Report


Directors Report continued

responsible for taking reasonable steps for safeguarding the assets of the Company and for taking reasonable steps in the prevention and detection of fraud and other irregularities.

InsuranceThe Company maintains appropriate Directors and Officers liability insurance cover.

Delegation of Responsibilities As an open ended variable capital investment company most of the Companys day-to-day management and administration is delegated to BlackRock group companies such as the Management Company which employs dedicated compliance and risk professionals, the Investment Advisers and other third party service providers. The Board has delegated the following areas of responsibility:

Management and Administration

The Board has delegated the investment management, distribution and administration of the Company and its Funds to the Management Company. The Management Company has delegated the management of the investment portfolio to the Investment Advisers. The Investment Advisers operate under guidelines determined by the Board and as detailed in the Companys prospectus relating to the Companys Funds. The relevant Investment Advisers have direct responsibility for the decisions relating to the day-to-day running of the Companys Funds and are accountable to both the Management Company and the Company for the investment performance of the Funds. The Board has also delegated the exercise of voting rights attached to the securities held in the portfolio to the respective Investment Advisers who may in turn delegate to BIM UK. Voting on behalf of shareholders is done in a manner which is believed to be in the best economic interest of shareholders as long-term investors.

The Management Company has delegated its responsibilities for administrative services of the Company and its Funds to The Bank of New York Mellon (International) Limited (the Administrator). The Administrator has responsibility for the administration of the Companys affairs including the calculation of the net asset value and preparation of the financial statements of the Company, subject to the overall supervision of the Directors and the Management Company. The Administrator is a subsidiary of The Bank of New York Mellon Corporation. The Company has appointed The Bank of New York Mellon (International) Limited as Depositary of its assets, which has responsibility for safe-keeping of such assets, pursuant to the regulations. The Depositary is a subsidiary of The Bank of New York Mellon Corporation. The Management Company has delegated transfer agent and share registration services to J.P. Morgan Bank Luxembourg S.A.

The Management Company reports to the Board on a quarterly basis and by exception where necessary. Reporting is in place to ensure that the Board can effectively oversee the actions of its delegates.

The Management Company is responsible for the risk management and internal controls of the Company and

for reviewing their effectiveness, for ensuring that financial information published or used within the business is reliable, and for regularly monitoring compliance with regulations governing the operation of the Company. The Management Company reviews the effectiveness of the internal control and risk management systems on an ongoing basis to identify, evaluate and manage the Companys significant risks. As part of that process, there are procedures designed to capture and evaluate any failings or weaknesses. Should a case be categorised by the Board as significant, procedures exist to ensure that necessary action is taken to remedy the failings.

The Board is also responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Companys financial reporting objectives. The Company has procedures in place to ensure all relevant accounting records are properly maintained and are readily available, including production of annual and half-yearly financial statements. These procedures include appointing the Administrator to maintain the accounting records of the Company independently of the Investment Manager and the Depositary. The financial statements are prepared in accordance with applicable law and Generally Accepted Accounting Principles (GAAP) and are approved by the Board of Directors of the Company. The accounting information given in the annual report is required to be audited and the Audit report, including any qualifications, is reproduced in full in the annual report of the Company.

The control processes over the risks identified, covering financial, operational, compliance and risk management, is embedded in the operations of the Management Company, BIM UK and other parties including the Administrator and the Depositary. There is a monitoring and reporting process to review these controls, which has been in place throughout the period under review and up to the date of this report, carried out by BIM UKs corporate audit department.

BIM UKs internal audit and operational risk units report to the Board through the Management Company on a quarterly basis. The Management Company also receives a report from the Administrator and the Depositary on the internal controls of the administrative and depositary operations of the Company. The Board recognises that these control systems can only be designed to manage rather than eliminate the risk of failure to achieve fund objectives, and to provide reasonable, but not absolute, assurance against material misstatement or loss, and relies on the operating controls established by the service providers.

Financial Reporting The Company prepares its financial statements under Luxembourg GAAP and on a going concern basis.

RemunerationThe Company is an investment company and has no employees or executive Directors. No Director (past or present) has any entitlement to a pension from the Company, and the Company has not awarded any share options or long-term performance



incentives. No element of Directors remuneration is performance-related. Those Directors who are also employees of the BlackRock group are not entitled to receive a Directors fee. All other Directors are paid fees which are submitted for approval by the shareholders at the annual general meeting and are disclosed on page 595. The Board believes that the level of remuneration for those Directors who take a fee properly reflects the time commitment and responsibilities of their roles. The maximum amount of remuneration payable to the Directors is approved by the Board.

Communication with ShareholdersThe Board is responsible for convening the annual general meeting and all other general meetings of the Company. Shareholders have the opportunity to, and are encouraged to attend and vote at general meetings. Notice of general meetings is issued in accordance with the Articles of Incorporation of the Company and notice of the annual general meeting is sent out at least 8 days in advance of the meeting. All substantive matters put before a general meeting are dealt with by way of separate resolution. Proxy voting figures are noted by the chairman of the general meeting.

The proceedings of general meetings are governed by Luxembourg company law and the Articles of Incorporation of the Company.

The Board has reporting procedures in place such that client communication with BIM UK is reported to the Board, including shareholder complaints. BIM UK has been appointed Principal Distributor and is tasked with actively managing the relationship between the Company and its shareholders.

Directors Biographies

Paul Freeman (Chairman, appointed 17 July 2017) (British): Mr Freeman currently serves as a Director on the Boards of a number of BlackRock Group companies and investment funds. He was until December 2015 a Managing Director of BlackRock, which he had joined in August 2005 (which then was Merrill Lynch Investment Managers). Up until July 2011 Mr Freeman was the Head of Product Development and Range Management for the EMEA region with responsibility for the development and ongoing product management of all funds domiciled in EMEA and distributed on a cross-border basis by BlackRock. Between July 2011 and December 2015 Mr Freeman worked closely with BlackRocks Government affairs team and served on various internal governance committees and on the Boards of a number of group subsidiaries and managed funds. Mr Freeman has worked in the financial services industry for over 35 years and, prior to BlackRock, has held senior management positions at Schroders, Rothschild Asset Management, Henderson Investors and GT Management (now part of Invesco). Mr Freeman is a Chartered Accountant.

Nicholas C.D. Hall (ex-Chairman) (British) (resigned 31 May 2017): Mr Hall was, until he retired in May 2009, General Counsel of BlackRock International (previously known as Merrill Lynch Investment Managers International) based in London, a position he held from his appointment in August

1998. He joined the Group in 1983. He was educated at St. Catharines College, Cambridge graduating with a MA (Law) degree in 1975. He qualified as a solicitor in England and Wales in 1978 and in Hong Kong in 1987. Up until 31 May 2017 he was a non-executive Director of BlackRock Investment Management (UK) Limited, BlackRock Advisors (UK) Limited, BlackRock Group Limited, Chairman of BlackRock Life Limited, BlackRock Strategic Funds and BlackRock Global Index Funds and served on the Boards of a number of other BlackRock entities and sponsored funds. Mr Hall chaired the BlackRock Group Limited EMEA Conflicts Oversight Committee and was a member of the BlackRock Group Limited EMEA Audit Committee, Nominations Committee and Risk Committee.

Francine Keiser (Luxembourger): Ms Keiser is a former Partner of Linklaters LLP and is now a consultant to the firm. She has been a member of the Luxembourg Bar since 1989. Ms Keiser is an experienced investment funds lawyer with wide expertise in all legal aspects of investment management, in particular in the UCITS area. She is Chairperson of the Board of the Management Company and also on the Boards of flagship funds of several major fund promoters, including BlackRock Strategic Funds and BlackRock Global Index Funds.

Alexander C. Hoctor-Duncan (British) (resigned 6 October 2016): Mr Hoctor-Duncan is a Managing Director at BlackRock and is Head of BlackRocks Europe, Middle East and Africa Retail business. He is a member of the Global Client Group Executive Committee, Leadership Committee, and European Executive Committee, and also serves as a Director on the Boards of BlackRock Strategic Funds and BlackRock Global Index Funds. Mr. Hoctor-Duncan is based in London.

Prior to moving to his current role, Mr. Hoctor-Duncan was Head of Retail Sales in the EMEA region. Mr. Hoctor-Duncans service with the firm dates back to 1997, including his years with Mercury Asset Management and Merrill Lynch Investment Management (MLIM), which merged with Blackrock in 2006. At MLIM, he was head of the UK Retail business and Head of Sales in the UK retail market.

Frank P. Le Feuvre (British nationality, Jersey resident)(resigned 29 September 2017): Mr Le Feuvre was the Country Manager for the Channel Islands and was a member of BlackRocks Global Client Group. Mr Le Feuvres service with the firm dated back to 1972, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006. At MLIM, he was Head of the Jersey business and Managing Director of Merrill Lynch Investment Management (Channel Islands) Limited. Mr Le Feuvre also served as a Director on the Boards of BlackRock Strategic Funds and BlackRock Global Index Funds.

Geoffrey D. Radcliffe (British nationality, Luxembourg resident): Mr Radcliffe is a Managing Director at BlackRock and is based in Luxembourg. He is a member of the BlackRock Business Operations Global Fund Services team and heads Fund Administration for EMEA, with responsibilities extending



into Asia Pacific. Mr Radcliffe is a Fellow of The Institute of Chartered Accountants in England and Wales and an Associate of The Chartered Institute of Bankers. He has 30 years of banking, accounting and fund experience in the Isle of Man, London, Bermuda and Luxembourg. Mr Radcliffe joined the BlackRock Group in 1998. He serves as a Director on the Board of the Management Company and also on the Boards of a number of BlackRock funds including BlackRock Strategic Funds and BlackRock Global Index Funds.

Bruno Rovelli (Italian) (resigned 6 October 2016): Mr Rovelli is Head of Investment Advisory for BlackRock in Italy. Before joining Blackrock in 2011 Mr Rovelli worked for over 11 years at Eurizon Capital, the largest asset manager in Italy. At Eurizon Capital Mr Rovelli served in various roles including Chief Strategist, Chief Investment Officer of the institutional business, Head of Quantitative Strategies and, from 2005 onwards, Chief Investment Officer for the mutual funds business. Prior to joining Eurizon Capital, Mr Rovelli served as an economist and fixed income strategist for Citigroup, Bank of America and Unicredit. Mr Rovelli is a graduate in economics (First Class Honours) from Luigi Bocconi University in Milan. Mr Rovelli also serves as a Director on the Board of BlackRock Strategic Funds and BlackRock Global Index Funds.

Barry ODwyer (Irish) (appointed 17 October 2016): Mr ODwyer is a Managing Director at BlackRock. He is the Head of Fund Governance for BlackRocks European open-ended fund ranges and is the Chief Operating Officer for BlackRocks Irish business. He serves as a Director on the Boards of a number of BlackRock corporate, fund, and management companies domiciled in Ireland, Luxembourg, Switzerland and Germany and on the Board of BlackRocks UK Life company. He was the chairman of the Irish Funds Industry Association 2014-2015, is a Board Director of Financial Services Ireland and is a member of An Taoiseachs Financial Services Industry Advisory Committee.

He joined BlackRock Advisors (UK) Limited in 1999 as head of risk management and moved to his present role in 2006. Prior to joining BlackRock Advisors (UK) Limited, Mr ODwyer worked as risk manager at Gartmore Investment Management and at HypoVereinsbank and National Westminster Bank.

Mr ODwyer graduated from Trinity College Dublin with a degree in Business Studies and Economics in 1991. He holds a Chartered Association of Certified Accountants qualification and an MBA from London City University Business School.

Robert Hayes (British) (appointed 17 October 2016): Mr Hayes is a Managing Director, is Head of Investment Oversight for the BlackRock EMEA business and CEO of BlackRock Fund Managers Limited. The Investment Oversight team, which is part of Strategic Product Management, is responsible for establishing and reviewing investment expectations for all BlackRock's Retail Funds in the EMEA region. He also chairs the Investment Committee and serves as a Director of BlackRock Life Limited and BlackRock Global Funds SICAV.

Mr Hayes service with the firm dates back to 2001, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006. At MLIM he was Head of Strategic Advice and immediately before his current role he was Head of Client Strategy in our Client Solutions business. Prior to joining the firm, Mr Hayes was a Partner with Watson Wyatt Partners, as an investment consultant for large pension funds and institutional investors. Earlier in his career, Mr Hayes was a UK Equity Investment Manager at ICI Pension Fund and Head of Institutional Investment at M&G Investment Management.

Mr Hayes earned a BSc degree in Mathematics from Southampton University in 1983.


Report on RemunerationThe below disclosures are made in respect of the remuneration policies of the BlackRock group (BlackRock), as they apply to BlackRock (Luxembourg) S.A. (the Management Company). The disclosures are made in accordance with the Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), as amended, including in particular by Directive 2014/91/EU of the European Parliament and of the council of 23 July 2014, (the Directive), and the Guidelines on sound remuneration policies under the UCITS Directive and AIFMD issued by the European Securities and Markets Authority. The Law of 10 May 2016 (2016 Law) transposed the Directive as regards to depositary functions, remuneration policies and sanctions, thereby amending the 2010 Law and the AIFM Law. The 2016 Law came into force on 1 June 2016.

BlackRocks UCITS Remuneration Policy (the UCITS Remuneration Policy) will apply to the European Economic Area (EEA) entities within the BlackRock group authorised as a manager of UCITS funds in accordance with the Directive, and will ensure compliance with the requirements of Article 14b of the Directive.

The Management Company has adopted the UCITS Remuneration Policy, a summary of which is set out below.

Role of the Compensation Committees Remuneration governance is a tiered structure including the Management Development and Compensation Committee (MDCC) of BlackRock, Inc.s Board of Directors (the BlackRock, Inc. Board) (BlackRock Inc.s independent remuneration committee), complemented by the EMEA Compensation Committee (the Committee) and the Management Companys Board of Directors (the Management Companys Board). These bodies are responsible for the determination of the Management Companys remuneration policies.

(a) MDCC The MDCCs primary purposes include:}to provide oversight of:

}BlackRocks executive compensation programmes;}BlackRocks employee benefit plans; }such other compensation plans as may be established

by BlackRock from time to time for which the MDCC is deemed as administrator; and

}review and discuss the compensation discussion and analysis included in the BlackRock, Inc. annual proxy statement with management and approval of the MDCC report for inclusion in the proxy statement.

The MDCC directly retains its own independent compensation consultant, Semler Brossy Consulting Group LLC, who has no relationship with BlackRock, Inc. or the BlackRock, Inc. Board that would interfere with its ability to provide independent advice to the MDCC on compensation matters.

The MDCC is currently composed of Messrs. Gerber (Chairman), Komansky, Grosfeld, Maughan, Mills and Nixon. The BlackRock, Inc. Board has determined that all of the

members of the MDCC are independent within the meaning of the listing standards of the New York Stock Exchange (NYSE), which requires each meet a non-employee director standard.

The MDCC held 8 meetings during 2016. The MDCC charter is available on BlackRock, Inc.s website (www.blackrock.com).

(b) EMEA Compensation Committee The Committee is established for the purpose of reviewing compensation policies, practices, and principles as required by local/regional rules set by regulatory bodies. Specifically, the Committees primary purposes are to review and make recommendations concerning:

}executive compensation programmes; }employee benefit plans; }such other compensation plans as may be established from

time to time; and}other local/regional compensation policies, practices, and

principles as required to comply with local/regional rules as set by regulators.

The Committee consists of a minimum of three members and is constituted in a way that enables it to exercise its judgment and demonstrate its ability to make decisions which are consistent with the current and future financial status of the business. The current members are: David Blumer, Head of the EMEA Region; Dan Dunay, Global Head of Reward; and Karen Dennehy, EMEA Head of Human Resources. Only members of the Committee have the right to attend Committee meetings and the Committee may request the attendance of any executive or other person as deemed appropriate to facilitate the review of remuneration recommendations and policy design to ensure that the remuneration practices are consistent with effective risk management and do not encourage excessive risk taking.

Examples of additional attendees may include individuals from the Operational Risk and Regulatory Compliance functions.

Decision-making process Compensation decisions for employees are made once annually in January following the end of the performance year. This timing allows full-year financial results to be considered along with other non-financial goals and objectives. Although the framework for compensation decision-making is tied to financial performance, significant discretion is used to determine individual compensation based on achievement of strategic and operating results and other considerations such as management and leadership capabilities.

No set formulas are established and no fixed benchmarks are used in determining annual incentive awards. In determining specific individual compensation amounts, a number of factors are considered including non-financial goals and objectives and overall financial and investment performance. These results are viewed in the aggregate without any specific weighting, and there is no direct correlation between any particular performance measure and the resulting annual incentive award.

Report on Remuneration


Report on Remuneration continuedAnnual incentive awards are generated from a bonus pool.

The size of the projected bonus pool, including cash and equity awards, is reviewed throughout the year by the MDCC and the final total bonus pool is approved after year-end. As part of this review, the MDCC receives actual and projected financial information over the course of the year as well as final year-end information. The financial information that the MDCC receives and considers includes the current year projected income statement and other financial measures compared with prior year results and the current year budget. The MDCC additionally reviews other metrics of Blackrocks financial performance (e.g., net inflows of AUM and investment performance) as well as information regarding market conditions and competitive compensation levels.

The MDCC regularly considers managements recommendation as to the percentage of pre-incentive operating income that will be accrued and reflected as a compensation expense throughout the year for the cash portion of the total annual bonus pool (the accrual rate). The accrual rate of the cash portion of the total annual bonus pool may be modified by the MDCC during the year based on its review of the financial information described above. The MDCC does not apply any particular weighting or formula to the information it considers when determining the size of the total bonus pool or the accruals made for the cash portion of the total bonus pool.

Following the end of the performance year, the MDCC approves the final bonus pool amount.

As part of the year-end review process the Operational Risk and Regulatory Compliance departments report to the Committee on any activities, incidents or events that warrant consideration in making compensation decisions.

Individuals are not involved in setting their own remuneration.

Control functionsEach of the control functions (Operational Risk, Legal & Compliance, and Internal Audit) has its own organisational structure which is independent of the business units. The head of each control function is either a member of the Global Executive Committee, BlackRocks global management committee, or has a reporting obligation to the Management Companys Board.

Functional bonus pools are determined with reference to the performance of each individual function. The remuneration of the senior members of control functions is directly overseen by the Committee.

Link between pay and performance There is a clear and well defined pay-for-performance philosophy and compensation programmes which are designed to meet five key objectives as detailed below: }attracting, retaining and motivating employees capable

of making significant contributions to the long-term success of the business;

}aligning the interests of senior employees with those of shareholders by awarding BlackRock, Inc. stock as a significant part of both annual and long-term incentive awards;

}controlling fixed costs by ensuring that compensation expense varies with profitability;

}linking a significant portion of an employees total compensation to the financial and operational performance of the business as well as its common stock performance; and

}discouraging excessive risk-taking.

Driving a high-performance culture is dependent on the ability to measure performance against objectives, values and behaviours in a clear and consistent way. Management Companies use a 5-point rating scale to provide an overall assessment of an employees performance, and employees also provide a self-evaluation. The overall, final rating is reconciled during each employees performance appraisal. Employees are assessed on the manner in which performance is attained as well as the absolute performance itself.

In keeping with the pay-for-performance philosophy, ratings are used to differentiate and reward individual performance but dont pre-determine compensation outcomes. Compensation decisions remain discretionary and are made as part of the year-end compensation process.

When setting remuneration levels other factors are considered, as well as individual performance, which may include: }the performance of the Management Company, the funds

managed by the Management Company and/or the relevant functional department;

}factors relevant to an employee individually (e.g. relevant working arrangements (including part-time status if applicable); relationships with clients and colleagues; teamwork; skills; any conduct issues; and, subject to any applicable policy, the impact that any relevant leave of absence may have on contribution to the business);

}the management of risk within the risk profiles appropriate for BlackRocks clients;

}strategic business needs, including intentions regarding retention;

}market intelligence; and }criticality to business.

A primary product tool is risk management and, while employees are compensated for strong performance in their management of client assets, they are required to manage risk within the risk profiles appropriate for their clients.

Therefore, employees are not rewarded for engaging in high-risk transactions outside of established parameters. Compensation practices do not provide undue incentives for short-term planning or short-term financial rewards, do not reward unreasonable risk and provide a reasonable balance between the many and substantial risks inherent within the business of investment management, risk management and advisory services.


The compensation model includes a basic salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to be considered for a bonus, there is no contractual obligation to make any award to an employee under its discretionary bonus scheme. In exercising discretion to award a discretionary bonus, the factors listed above (under the heading Link between pay and performance) may be taken into account in addition to any other matters which become relevant to the exercise of discretion in the course of the performance year.

Discretionary bonus awards for all employees, including executive officers, are subject to a guideline that determines the portion paid in cash and the portion paid in stock and subject to additional vesting/clawback conditions. As annual compensation increases, a greater portion is paid in stock. The MDCC adopted this approach in 2006 to substantially increase the retention value and shareholder alignment of the compensation package for eligible employees, including the executive officers. The portion deferred into stock vests in equal instalments over the three years following grant.

Supplementary to the annual discretionary bonus as described above, equity awards from the Partner Plan and Enterprise Leadership Acceleration at BlackRock Plan are made to select senior leaders to provide greater linkage with future business results. These long-term incentive awards have been established individually to provide meaningful incentives for continued performance over a multi-year period recognizing the scope of the individuals role, business expertise and leadership skills. These awards usually vest fully three years after they are granted.

Selected senior leaders are eligible to receive performance-adjusted equity-based awards from the BlackRock Performance Incentive Plan (BPIP). Awards made from the BPIP have a three-year performance period based on a measurement of As Adjusted Operating Margin1 and Organic Revenue Growth2. Determination of pay-out will be made based on BlackRocks achievement relative to target financial results at the conclusion of the performance period. The maximum number of shares that can be earned is 165% of the award in those situations where both metrics achieve pre-determined financial targets. No shares will be earned where BlackRocks financial performance in both of the above metrics is below a pre-determined performance threshold. These metrics have been selected as key measures of shareholder value which endure across market cycles.

A limited number of investment professionals have a portion of their annual discretionary bonus (as described above) awarded as deferred cash that notionally tracks investment in selected products managed by the relevant employee. The intention of these awards is to align investment professionals with the investment returns of the products they manage through the deferral of compensation into those products. Clients and external evaluators have increasingly viewed more favourably those products where key investors have

skin in the game through significant personal investments. These awards vest in equal instalments over the three years following grant.

Identified StaffThe UCITS Remuneration Policy sets out the process that will be applied to identify staff as Identified Staff, being categories of staff of the Management Company, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profiles of the Management Company or of the funds it manages.

The list of Identified Staff will be subject to regular review, being formally reviewed in the event of, but not limited to:}Organisational changes}New business initiatives}Changes in significant influence function lists}Changes in role responsibilities}Revised regulatory direction

Quantitative Remuneration DisclosureAppropriate disclosures will be made in due course in accordance with Article 69(3) of the Directive once a full performance year has been completed.

(1) As Adjusted Operating M