BlackRock Global Funds - Asia Pacific Equity Income Fund D2 USD LU

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1 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 1 of 9 Morningstar Category Asia-Pacific ex-japan Category Index MSCI AC Asia Pacific ex Japan HDY NR USD Total Assets Mil USD Current Yield % Inception Date 2/5/11 Domicile/ Currency LUX/USD Morningstar Rating QQQQ Equity Style Map Giant Large Mid Small K 15K 1K Performance 31/3/18 Growth of 1, Annualized Value USD Ret % Fund 15, Category 16, Index 13, Full Manager Change Partial Manager Change Deep Value People Value Blend Growth High Growth Micro Oisin Crawley 7/14 Chris Hall 6/15 Total Named Managers 2 Morningstar Pillars Process p. 2-3 Performance p. 4 People p. 5 Parent p. 6 Price p. 7 Positive Negative * & * * * * ) 5K Morningstar Rating QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQ QQ Quartile Rank in Category Percentile Rank in Category % Total Return USD /- Category /- Index Process Equity Style Box Asset Allocation Stock Bond Cash Other Equity Supersectors m Cyclical w Sensitive x Defensive Price TER/OGC Analyst View Germaine Share, Associate Director A decent proposition that comes with a number of uncertainties. The conduct of Morningstar's analysts is governed by Morningstar's Code of Ethics, Securities Trading and Disclosure Policy, and Morningstar Manager Research Integrity Policy. For informaton regarding conflicts of interest, please click Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ Á The for Funds is a forward-looking analysis of a fund. Morningstar has identified five key areas crucial to predicting the future success of a fund: People, Parent, Process, Performance, and Price. The pillars are used in determining the for a fund. s are assigned on a five-tier scale running from Gold to Negative. The top three ratings, Gold, Silver, and Bronze, all indicate that our analysts think highly of a fund; the difference between them corresponds to differences in the level of analyst conviction in a fund s ability to outperform its benchmark and peers through time, within the context of the level of risk taken over the long term (defined as a full market cycle or at least five years). Neutral represents funds in which our analysts don t have a strong positive or negative conviction over the long term (defined as a full market cycle or at least five years) and Negative represents funds that possess at least one flaw that our analysts believe is likely to significantly hamper future performance over the long term (defined as a full market cycle or at least five years). Past performance of a security may or may not be sustained in future and is no indication of future performance. For detailed information about the Morningstar Analyst Rating for Funds, please visit 6 Dec, 217 BGF Asia Pacific is a decent dividend-focused strategy, but some uncertainties remain. Oisin Crawley and Chris Hall have worked together for a relatively short time, having started managing the fund on July 2, 214, and June 3, 215, respectively. Crawley has 18 years of investment experience, and spent eight years managing Asia-Pacific equity mandates prior to joining BlackRock in 214. He took on BGF Japan Flexible Equity in March 217, and we have yet to see how he fares on the single-country mandate. Hall has 29 years of investment experience, and while he is well versed in Australian equities, he only started his Asian equity investment career when he joined BlackRock in 215. The duo is part of the newly merged, 39-member Asian and Global Emerging Markets Fundamental Equities team led by Andrew Swan. As part of the restructuring, the duo transitioned their role as head of research to Alex Chang, who joined in July 217, to better focus on portfolio management. The fund adopts a style-agnostic investment process which targets a 4% dividend yield. The process has seen several improvements under the current leadership, such as the introduction of a more structured framework for analysing various dividend strategies, and it continues to evolve. At our November 217 meeting, Hall talked about reducing the number of portfolio holdings to around 7 names, and increasing the fund s tracking error. Although sensible, we have yet to see its efficacy over a full market cycle. The comanagers rotate into various style factors based on the broader team s macro assessment, and though it has worked well on Swan s Bronzerated BGF Asian Dragon, it heavily depends on the managers experience and intuition, and is not necessarily repeatable. Between July 2, 214, and Nov 3, 217, the fund gained 5.78% per year, outperforming the MSCI AC Asia Pacific ex Japan High Dividend Yield Index by 327 basis points, and ranking in the 24th percentile among peers. Consistent with its dividend-focused strategy, the fund has been underweighting the strong-performing but low-dividend paying IT stocks such as Tencent and Alibaba, which hurt its one-year performance relative to the prospectus benchmark MSCI AC Asia Pacific ex Japan Index. Given that the comanagers are still building their track record with an evolving investment process, we maintain the fund s Morningstar Analyst Rating of Neutral.

2 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 2 of 9 Process: Approach Morningstar Category Category Index Index Proxy Asia-Pacific ex-japan MSCI AC Asia Pacific ex A sensible dividend-focused strategy that is still evolving. Process Pillar 6 Dec, 217 The fund adopts a style-agnostic investment process which targets a dividend yield of 4%, with some flexibility to invest in capitalappreciation opportunities. The comanagers work closely with head of Asian fundamental equities Andrew Swan and the Risk and Quantitative Analysis Group to determine inflexion points in the Equity Style 31/1/18 Holdings-Based Style Map Deep Value Value Blend Growth High Growth Equity Style Box Factors Giant Large Mid Small Micro Fund Centroid: Weighted average of equity holdings Zone: 75% of fund equity holdings Category Average Index Proxy Market Cap Fund 3-Yr Avg Category Proxy Giant/Large Mid Small/Micro Avg Market Cap Bil USD Value Measures Fund 3-Yr Avg Category Proxy Price/Prospect. Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield Growth Measures Fund 3-Yr Avg Category Proxy Long-Term Earnings % Historical Earnings % Sales % Cash Flow % Book-Value % Asset Allocation 31/1/18 Current Allocation 3-Year Average Net Assets % Fund 3-Yr Avg Category Proxy Equity Fixed Income...1 Cash Other Regional Exposure 31/1/18 Market Type Equity % Fund 3-Yr Avg Category Proxy Developed Emerging Top 5 Countries Equity % Fund 3-Yr Avg Category Proxy China Australia Korea, Republic Of Taiwan, Republic Of China India Key Ratios 31/1/18 Fund 3-Yr Avg Category Proxy Net Margin % ROA % Debt/Total Capital % ROE % market, and which of the four dividend strategies to rotate into accordingly. While the flexible style has worked well on Swan s Bronze-rated BGF Asian Dragon, it heavily depends on the managers experience and intuition, and is not necessarily repeatable. The four dividend strategies are: bond proxies (low-growth stocks with more than 4% dividend yield); growth at a reasonable yield (stocks with more than 2.5% dividend yield and a strong earnings-per-share growth profile); dividend champions (stocks with more than a 1.5% dividend yield, and a strong record of growing dividends and/or not cutting dividends); and high dividend yield (top 2% of dividend-yielding stocks on a 12-month forward basis within each market). The comanagers also consider each stock s dividend sustainability, based on its earnings and balance sheet health. They then construct a portfolio of 6-9 names, with individual stock positions typically limited to +/- 2% relative to the MSCI AC Asia Pacific ex Japan Index. Tracking error is targeted at 3%-8%. Sectors 31/1/18 Sector Delta Defensive Sensitive Cyclical Fund Index Larger sector concentrations versus the index move the investment to the corner of the triangle corresponding to that equity Super Sector. Equity Sectors Fund 3-Yr Avg Category Proxy xdefensive sconsumer Defensive dhealthcare futilities wsensitive icommunication Serv oenergy pindustrials atechnology mcyclical rbasic Materials tconsumer Cyclical yfinancial Services ureal Estate Economic Moat 31/1/18 Fund 3-Yr Avg Category Proxy Wide Moat Narrow Moat No Moat Coverage Ratio

3 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 3 of 9 Process: Portfolio Morningstar Category Category Index Index Proxy Asia-Pacific ex-japan MSCI AC Asia Pacific ex The comanagers have upheld their preference for cyclical yield in 217. Process Pillar Similarity to Index Proxy 31/12/17 6 Dec, 217 Given the comanagers ongoing expectation of a cyclical recovery, the fund has maintained its preference for cyclical yield. As a result, the Oct. 31, 217, portfolio had 1.11% in the energy sector, compared with the MSCI AC Asia Pacific ex Japan Index s 4.36%. The comanagers particularly favoured the upstream producers such as CNOOC, which they believed are best positioned to benefit from a rebound in oil price. They have changed their positioning within the financial sector (25.27%) over the past year, notably trimming the fund s exposure to the Australian banks. At our November 217 meeting, Chris Hall said Australia s low loan growth and trough-level nonperforming loans meant that the current high level of dividend yield was not sustainable. Instead, he preferred the large Chinese banks such as Bank of China and Agricultural Bank of China, which had stronger capital positions and were trading at cheaper valuations. Consistent with the fund s income focus, the October portfolio was 11.48% underweight in the generally low-dividend paying IT sector. The top pick was Samsung Electronics, which is committed to improving its shareholder returns policy such as doubling its payout ratio to 2%. China Mobile was another key holding in the October portfolio. Despite its low current dividend yield, Hall noted the company s strong cash position and the general trend of improving corporate governance in Asia. Index Proxy Overlap Number of Equity Holdings Fund 68 Index Proxy Fund Overlap With Index Proxy Holdings Overlap Asset Overlap Largest Common Holdings Fund % Proxy % Largest Distinct Holdings Fund % Portfolio Holdings 31/12/17 Previous Portfolio Date Equity Holdings Bond Holdings Other Holdings Assets in Top 1 Holdings Turnover Ratio (Reported) 3/11/ % Top 1 Equity Holdings Country Assets % Assets % Proxy % 31/12/17 3/11/17 31/12/17 T BHP Billiton Ltd AUS /14 <1 No r Basic Materials T Samsung Electronics Co Ltd KOR /1 <1 No a Technology T Samsung Electronics Co Ltd Participating KOR /17 <1 No a Technology Preferred T Bank Of China Ltd H CHN /16 <1 Narrow y Financial Services T Agricultural Bank of China Ltd H CHN /16 <1 Narrow y Financial Services T POSCO KOR /16 <1 No r Basic Materials T Shinhan Financial Group Co Ltd KOR /14 <1 y Financial Services 6.15 T Bank Negara Indonesia (Persero) Tbk Class B IDN /15 1 y Financial Services 33.5 T China Mobile Ltd CHN /17 <1 Narrow i Communication Serv T Doosan Bobcat Inc KOR /16 3 p Industrials Change since previous portfolio: T Increase Y Decrease R New First Bought Days Trading Economic Moat Sector 1-Yr Total New Holdings Largest Purchases % Assets Sector BlackRock ICS USD Liquidity Agency Inc 1.78 Nanya Technology Corp.54 a Eliminated Holdings Largest Sales % Assets Sector Kasikornbank Public Co Ltd DR.99 y S-Oil Corp.88 o Largan Precision Co Ltd.5 a CTBC FINANCIAL HOLDING CO LTD RTS. Largest Position Changes Current % Prior % Y Reliance Industries Ltd T The Siam Commercial Bank PCL DR R BlackRock ICS USD Liquidity Agency Inc Y Kasikornbank Public Co Ltd DR..99 Y S-Oil Corp..88

4 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 4 of 9 Morningstar Category Category Index Performance Asia-Pacific ex-japan MSCI AC Asia Pacific ex The comanagers continue to build their track record on the fund. Performance Pillar 6 Dec, 217 Oisin Crawley and Chris Hall took charge of the fund on July 2, 214, and June 3, 215, respectively. Between July 2, 214, and Nov. 3, 217, the fund gained 5.78% per year, outperforming the category benchmark MSCI AC Asia Pacific ex Japan High Dividend Yield Index by 327 basis points, and ranking in the 24th percentile among income-focused peers. Returns were less impressive when compared with the prospectus benchmark, lagging the MSCI AC Asia Pacific ex Japan Index by 58 basis points. Volatility (as measured by standard deviation) has been notably higher than both indexes and peers over this period, which can be attributable to some of the cyclical sector bets that the comanagers make when navigating turning points in the market. The fund returned 15.9% over the past year as of Sept. 3, 217, edging past the category benchmark by 66 basis points but trailing the prospectus benchmark by 558 basis points. The poor performance against the prospectus benchmark can be attributed to the fund s underweighting in the IT sector, particularly Tencent and Alibaba, both of which rallied hard over the past year. While disappointing, this is consistent with the fund s dividend-focused mandate given that the two names pay little to no dividends. Elsewhere, Indian car manufacturer Tata Motors was the top stock detractor. Nonetheless, Hall believed the name would benefit from auto demand recovery as India s economy improves. Morningstar Rating and Risk 31/3/18 Period Morningstar Ret vs Cat Morningstar Risk vs Cat Morningstar Rating 3 Years Avg High QQQ 5 Years Above Avg High QQQQ 1 Years Overall Rating Risk Analysis 31/3/18 3-Year Return and Risk Analysis Total Return % QQQQ Fund Category Index * & * * * * ) History 31/3/18 12-Month Rolling Return % Fund Full Manager Change Partial Manager Change Quartile Rank in Cat Percentile Rank in Cat % Total Return USD /- Category /- Index Income Return Standard Deviation 3-Year Risk Measures Fund Category Index Standard Deviation Sharpe Ratio R-Squared Beta Alpha Maximum Drawdown Fund Category Index Max Drawdown (%) Peak Date 5/15 5/15 5/15 Valley Date 2/16 1/16 1/16 Max Drawdown (Months) Upside/Downside Fund Category Index Upside Capture Ratio Downside Capture Ratio Returns 31/3/18 Trailing Returns Total Investor Rank in Cat Cat Index 1 Year Years Years Years Tenure 7/ Inception 5/ Rolling-Returns Summary 79% Month Rolling Periods 47 Observations, 3 Years The shading and percentages correspond to how often the fund returns landed in each category quartile. Income and Capital Returns Return % Income Return Capital Return Year /18 Income Income % Rank in Cat Capital Capital % Rank in Cat /

5 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 5 of 9 Morningstar Category Category Index People Asia-Pacific ex-japan MSCI AC Asia Pacific ex Oisin Crawley and Chris Hall have been at the helm for a relatively short time. People Pillar Management Team 6 Dec, 217 Oisin Crawley has managed BGF Asia Pacific since July 2, 214, and Chris Hall joined the roster as a comanager on June 3, 215. Crawley has 18 years of investment experience, and joined BlackRock in 214 after eight years at TT International managing Asia Pacific equity mandates. He took on BGF Japan Flexible Equity in March 217, and while he has some experience investing in the Japanese equity market from comanaging BGF Pacific Equity with Hall, it is too soon to tell whether he can add value for the single-country mandate. Hall has 29 years of investment experience. Before joining BlackRock in Hong Kong in 215, he spent 11 years at Argo Investment in Australia, where he managed a closed-end fund, Argo Ord. We note that Hall s BlackRock role represents his first foray into Asian equities. The duo is part of the 39-member Asian and Global Emerging Markets Fundamental Equities team led by Andrew Swan, a capable manager who manages the Bronze-rated BGF Asian Dragon. The team was formed through the merger of the Asian, emerging Europe, and Latin American teams in March 217, and sports 11 years of investment experience on average. Crawley and Hall transitioned the role of head of research to Alex Chang, who joined in July 217, in order to better focus on portfolio management. Chang brings 18 years of experience, nine of which spent holding various roles, including sell-side research, at UBS. Experience and Asset Load Number of Managers Longest Tenure Years Manager Retention Rate 5-Year % Average Manager Tenure 3.29 Years Advisor BlackRock Investment Management (UK) Ltd. Subadvisor BlackRock Investment Management, LLC BlackRock Investment Management (UK) Ltd. Blackrock Financial Management, Inc BlackRock Institutional Trust Company NA BlackRock International Limited BlackRock (Singapore) Limited

6 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 6 of 9 Morningstar Category Category Index Parent Asia-Pacific ex-japan MSCI AC Asia Pacific ex BlackRock, though not perfect, has largely served fundholders well. Parent Pillar Positive 9 Jun, 217 At $5 trillion in assets under management, BlackRock is the largest asset manager in the world. The firm isn't perfect--after struggling with its active-equity capabilities for years, it's reorganizing that outfit for the second time, and its ishares franchise launches some trendy exchange-traded funds. But the firm has made Assets By Region, By Domicile Bil USD Fund Family Details Europe (*) Breakdown great strides to encourage its portfolio managers to invest alongside fundholders, and strengthen its investment offerings. The firm's Parent rating was raised to Positive from Neutral. The firm has grown quickly, in large part thanks to the strength of ishares and its active fixed-income and multi-asset businesses, as well as a growing institutional business, which includes mostly index-based strategies. BlackRock's solid stewardship of capital stems in large part from its decision that to succeed as a publicly traded asset manager, it must act as a responsible, high-performing fiduciary. The firm uses its scale and technological capabilities to achieve this goal. BlackRock is constantly evolving and has focused on technology in recent years to further growth, including selling its proprietary riskmanagement system, Aladdin, to competitors and developing a pared-down version for advisors. A recent announcement to move $3 billion in active equity to quant-driven strategies demonstrates a willingness to rely more heavily on technology to run portfolios. Morningstar Rating Breakdown Americas Europe & Africa Asia & Australia 8.1 Rating Assets % Œ ˇ 4. Ø Not Rated 59.8 Rating Assets % QQQQQ 12.6 QQQQ 3.6 QQQ 17.4 QQ 6.7 Q.1 Not Rated 32.7 Asset Class Breakdown Europe (ex Money Mkt) Assets Bil USD Asset Class Assets Bil USD Assets % Equity Fixed Income Allocation Convertibles Property Alternative Commodities Fund Family Details Europe Top Performing Funds Category Name Fund Size Mil USD Return % 3-Year Rank in Cat 3-Year BlackRock Active Selection Fund - European Europe Large-Cap Blend Equity Unconstrained Equity Fund Institutional EUR Acc BlackRock Global Funds - China Bond Fund D3 RMB Bond USD BlackRock UK Equity I Acc UK Large-Cap Blend Equity Largest Funds Category Name Fund Size Mil USD Return % 3-Year Rank in Cat 3-Year BlackRock Global Funds - Global Allocation USD Moderate Allocation 19, Fund A2 BlackRock Global Funds - Euro Short Duration EUR Diversified Bond - Short 15, Bond Fund A2 EUR Term ishares Developed World Index Fund (IE) Flexible Acc USD Global Large-Cap Blend Equity 12, Recent Fund Launches Category Name Fund Size Mil USD Return % Inception Inception Date BlackRock Emerging Markets Equity Impact Global Emerging Markets Equity /2/18 Fund Class Flexible Accumulating USD BlackRock Global Funds - Dynamic High Income USD Flexible Allocation 1, /2/18 Fund D2 USD BlackRock Strategic Funds - USD High Yield Fixed Maturity Bond Fund D2 USD Fixed Term Bond /1/18 (*) All data is based on Branding name and refers to funds domiciled in Europe.

7 BlackRock Global Funds - Asia Pacific Fund D2 USD Page 7 of 9 Morningstar Category Category Index Price Asia-Pacific ex-japan MSCI AC Asia Pacific ex The fund is relatively expensive TER/OGC Expense History TER/OGC Price Pillar Negative 6 Dec, 217 BGF Asia Pacific D2 USD, the fund s clean share class (that is, one that does not charge retrocessions), had an annual report expense ratio of 1.8% as of Aug. 31, 216, which is 12 basis points more expensive than the Asia-Pacific Equity clean share class median of.96%. Investors that cannot readily access the clean share class can consider the retail share class A2 USD, which had an annual report expense ratio of 1.84%. This is in line with similarly distributed peers median cost of 1.83%, which is a reasonable price level TER/OGC Net Assets Mil USD Net Flows Mil USD Expense Breakdown Ongoing charge Ongoing charge 31/1/ Selected Components Max Management Fee.75 Performance Fee Fee Level Fee Level Peer Group Fee Level Breakpoints High >. Above Average.-. Average.-. Below Average.-. Low <. Fund 1.1 Peer Median Share Class Information Share Class Identifier Morningstar Category TER/OGC Max Mgmt Fee Performance Fee Maximum Inital Charge BGF Asia Pacific Equity Inc D2 USD Asia-Pacific ex-japan Equity Income ,.6 BGF Asia Pacific Equity Inc A2 USD LU Asia-Pacific ex-japan ,.18 BGF Asia Pacific Equity Inc A5G LU Asia-Pacific Equity - Currency Hedged SGD Hdg BGF Asia Pacific Equity Inc A5G LU Asia-Pacific ex-japan ,.5 BGF Asia Pacific Equity Inc A6 USD LU Asia-Pacific ex-japan ,.5 BGF Asia Pacific Equity Inc A2 GBP LU Asia-Pacific ex-japan Minimum Initial Inv Assets Bil USD

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Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Negative Represents funds that possess at least one flaw that our analysts believe is likely to significantly hamper future performance, such as high fees or an unstable management team. Because of these faults, we believe these funds are inferior to most competitors and will likely underperform their relevant performance benchmark and/or peer group, within the context of the level of risk taken, over a full market cycle. Morningstar may also use two other designations in place of a rating: Under Review This designation means that a change that occurred with the fund or at the fund company requires further review to determine the impact on the rating. Not Ratable This designation is used only where we are providing a report on a new strategy or on a strategy where there are no relevant comparators, but where investors require information as to suitability. For more information about our Analyst Rating methodology please go to Morningstar Star Rating The Morningstar Star Rating is a proprietary data point that is quantitatively driven. Funds are rated from one to five stars based on how well the fund performed (after adjusting for risk and accounting for sales charges) in comparison to similar funds. Within each Morningstar Category, the top 1% of funds receive five-stars and the bottom 1% receives one-star. Funds are rated for up to three time periods three-, five-, and ten-years and these ratings are combined to produce an overall star rating, which is noted within the Report. Funds with less than three years of history are not rated. Morningstar Star Ratings are based entirely on a mathematical evaluation of past performance. Morningstar Star Ratings are in no way to be considered a buy or sell signal nor should be viewed as a statement of fact. Equity-Related Data Points The Report lists the fund s top ten holdings as of the dated noted. For each underlying holding, a series of data points is provided including, where applicable, that security s Economic Moat as of the date noted. Economic Moat The concept of an economic moat plays a vital role in our equity analyst s qualitative assessment of a firm s long-term investment potential, but also in the actual calculation of its fair value estimate. An economic moat is a structural feature that allows a firm to sustain excess profits over a long period of time. We define economic profits as returns on invested capital (or ROIC) over and above our estimate of a firm s cost of capital, or weighted average cost of capital (or WACC). Without a moat, profits are more susceptible to competition. We have identified five sources of economic moats: intangible assets, switching costs, network effect, cost advantage, and efficient scale. Companies with a narrow moat are those we believe are more likely than not to achieve normalized excess returns for at least the next 1 years. Wide-moat companies are those in which we have very high confidence that excess returns will remain for 1 years, with excess returns more likely than not to remain for at least 2 years. The longer a firm generates economic profits, the higher its intrinsic value. We believe low-quality, no-moat companies will see their normalized returns gravitate toward the firm s cost of capital more quickly than companies with moats. For more information about methodology in analysing stocks, please go to For Recipients in Australia: This Report has been issued and distributed in Australia by Morningstar Australasia Pty Ltd (ABN: ; ASFL: 24892). Morningstar Australasia Pty Ltd is the provider of the general advice ( the Service ) and takes responsibility for the production of this report. The Service is provided through the research of investment products. To the extent the Report contains general advice it has been prepared without reference to an investor s objectives, financial situation or needs. Investors should consider the advice in light of these matters and, if applicable, the relevant Product Disclosure Statement before making any decision to invest. Refer to our Financial Services Guide (FSG) for more information at For Recipients in Hong Kong: The Report is distributed by Morningstar Investment Management Asia Limited, which is regulated by the Hong Kong Securities and Futures Commission to provide services to professional investors only. 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