BlackRock Global Allocation Fund

Transcription

1 BlackRock Global Allocation Fund January 2018 NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

2 Growing life expectancies demand long-term growth in investments Erosion of purchasing power over 30 years* For a 65-year-old uppermiddle-class couple, there s a 43% chance that at least one will survive to age 95 or older $1,000,000 $800,000 $50,000 $40,000 Over 30 years, the purchasing power of principal falls from $1,000,000 to $545,500 $600,000 $400,000 $30,000 $20,000 While the purchasing power of annual income falls from $30,000 to $17,000 $200,000 $10,000 $0 $0 Year 0 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 Purchasing Power of Annual Income (RHS) Purchasing Power of Principal (LHS) Source: BlackRock, Society of Actuaries. For illustrative purposes only. * Assumes 2% annual inflation and 3% annual yield on a starting investment of $1,000,000. 2

3 A focus on downside protection has allowed investors to achieve growth over long-term market cycles Hypothetical investment of $10k in global stocks vs. 70% upside/70% downside* $30,000 $25, % $23,743 $20, % +117% $10,000-31% +167% -38% -44% -54% $0 Mar-00 Jul-04 Nov-08 Mar-13 Jul-17 Global Stocks Hypothetical 70% Upside / 70% Downside Portfolio Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Morningstar. For illustrative purposes only. It is not possible to invest directly in an index. Global stocks are represented by the FTSE World Index. * Hypothetical 70% upside / 70% downside portfolio has upside capture ratio of 70% and downside capture ratio of 70% relative to the FTSE World Index. Up capture shows how much a portfolio gained, relative to a benchmark, when the benchmark rose. Down capture shows how much a portfolio lost, relative to a benchmark, when the benchmark decreased. 3

4 Certain low volatility equity strategies have outperformed when U.S. equity valuations have been high Average 3-year return following periods when the CAPE of the S&P 500 >28x 10% 8.9% 32x 5.7% 5% Current cyclically-adjusted P/E (CAPE) ratio of the S&P 500* 2.5% 0.8% 17x 0% S&P 500 Index U.S. Minimum Volatility Stocks World Allocation Funds U.S. Dividend Growers* Historical average (since 1881) Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar, Shiller, Thomson Reuters Datastream. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. U.S. minimum volatility stocks represented by the MSCI USA Minimum Volatility Index, World Allocation Funds by the Morningstar World Allocation category average, and U.S. dividend growers by the Russell 1000 Dividend Growth Index. * Cyclically-adjusted price/earnings ratio is based on average inflation-adjusted earnings from the previous 10 years. Returns are 3-year annualized returns based on monthly data. Returns calculated from February 1989 except for U.S. dividend growers which begins in July

5 Diversification across regions and asset classes has helped provide a more consistent investor experience Calendar year returns by asset class % 79% 19% 17% 19% 32% 14% 1% 12% 37% 10% 32% 15% 8% 18% 23% 11% 1% 11% 25% -11% 28% 12% 5% 17% -1% 6% 1% 11% 22% -37% 26% 9% 2% 16% -3% -2% -1% 10% 10% -43% 13% 8% -1% 4% -5% -3% -6% 2% 10% Diversified equally across asset classes* Invested in prior year s best performer* Invested in prior year s worst performer* Cumulative Return Standard Deviation 41.7% 13.4% -37.2% 22.3% 25.8% 31.6% -46% 4% 8% -12% 2% -7% -5% -15% 2% 6% -53% -10% 5% -18% 0% -8% -33% -33% 0% 2% U.S. Stocks Developed Stocks ex- U.S. Emerging Market Stocks U.S. 10Y Treasury Bonds Non-U.S. Gov t Bonds Emerging Market Bonds Commodities Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: Bloomberg, Morningstar. U.S. stocks represented by the S&P 500 Index, developed stocks ex-u.s. by the MSCI EAFE Index, emerging market stocks by the MSCI Emerging Markets Index, U.S. bonds by the BofA/ML Current 10-Year U.S. Treasury Index, non-u.s. bonds by the Citigroup Non-USD World Government Bond Index, emerging market bonds by the JP Morgan Emerging Market Bond Index, commodities by the S&P Goldman Sachs Commodity Index. Returns include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. * Diversified portfolio assumes investment is distributed equally across each of the 7 asset classes shown, rebalanced annually. Investment in prior year s best/worst performer assumes 100% investment in respective asset class on January 1 of each year. Standard deviation based on annual returns for each investment. 5

6 BlackRock Global Allocation Fund

7 GA_I BlackRock Global Allocation Fund has delivered on its mission for over 28 years Our Mission: Provide a rate of return competitive with that of global stocks at a lower level of volatility over a full market cycle Competitive returns with less volatility Annualized total return since inception 12% 10.01% 10.39% Annualized standard deviation since inception 18% 14.97% 14.14% 7.53% 8% 12% 9.53% 4% 6% 0% Global Allocation Fund (I) Global Stocks U.S. Stocks 0% Global Allocation Fund (I) Global Stocks U.S. Stocks As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Institutional shares have limited availability and may be purchased at various minimums. See prospectus for details. Returns calculated from first full month post inception (February 28, 1989). Returns are net of fees and include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Global stocks represented by the FTSE World Index and U.S. stocks by the S&P 500 Index. Up capture shows how much the fund gained, relative to a benchmark, when the benchmark rose. Down capture shows how much the fund lost, relative to a benchmark, when the benchmark decreased. Annualized total return as of December 31, Year 5 Years 10 Years Capture ratios vs. global stocks since inception Global Allocation Fund (I) 13.60% 6.56% 4.59% Upside: 69% Downside: 43% Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. Refer to blackrock.com for current month-end performance. Investment returns reflect total fund operating expenses, net of all fees, waivers and/or expense reimbursement. Total annual fund operating expenses as stated in the fund s most recent prospectus are 0.89% for Institutional shares. Net annual fund operating expenses (including investment related expenses) are 0.81% for Institutional shares. The difference between the fund s total and net expense ratios is due to fees that BlackRock has agreed to contractually waive through February 28, 2019, and any voluntary fee waivers. Such waivers may be terminated upon 90 days notice by the fund s board of directors or by a shareholder vote. Any voluntary fee waivers may be terminated at any time without notice. 7

8 GA_I What makes the Global Allocation Fund unique? Incepted in February 1989, partially in response to the October 1987 stock market crash, the strategy is one of the original global multi-asset portfolios The team combines a fundamental, bottom-up process with top-down asset allocation in order to look for undervalued investment opportunities around the globe while seeking to mitigate macro risks Unconstrained in search of opportunity One of the most experienced global multi-asset teams* Proven record of growing assets and managing volatility Diversified portfolio invested in 700+ securities across 40+ countries and 30+ currencies Combines traditional and non-traditional asset classes and investments across the capital structure Ability to deviate from benchmark to capture opportunity and manage risk 50+ person dedicated team with proven stability Portfolio manager team approach since fund inception in 1989 Portfolio managers and senior investors average over 20 years of investment experience Compelling risk-adjusted results for more than 28 years Superior downside capture history relative to 60/40 portfolios Independent risk management Flexibility to adapt as markets change Experience through bull & bear markets Historical returns in excess of global stocks with one-third less volatility Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. * Source: Morningstar. The fund has one of the longest Manager Tenure as defined by Morningstar among funds in Morningstar s World Allocation category. From first full month post inception (February 28, 1989) through December 31, 2017, downside capture of the fund (Institutional) relative to the FTSE World Index is 43%. Over the same period, downside capture of a hypothetical portfolio comprised of 60% Morningstar World Stock category and 40% Morningstar World Bond category is 56%. Volatility is measured by standard deviation. From first full month post inception (February 28, 1989) through December 31, 2017, annualized standard deviation based on monthly returns is 9.6% for the fund (Institutional) and 15.0% for global stocks (represented by the FTSE World Index). 8

9 Unconstrained in search of opportunity

10 Ability to invest across a broad opportunity set Benefits of a 50+ person team leveraging BlackRock s resources: Breadth of exposures: Ability to invest in traditional and difficult to access asset classes, regions, currencies, sectors, and securities Exposure to complex strategies: Ability to implement hedging (FX, credit, duration, equity beta), fixed income curve trades (steepeners, flatteners, forward markets), interest rate swaps, short sales Flexibility to trade in real time: Ability to rebalance portfolio as warranted in an attempt to capitalize on security price changes Directly holds securities: This is not a fund of funds portfolio, securities are purchased and held directly by the fund Equities Fixed Income Cash/FX Non-Traditional Common stock Preferred stock Single name options Index options Futures Dividend futures Warrants Developed markets Emerging markets Frontier markets American depository receipts Locally listed shares U.S. Treasuries and agencies Developed market sovereigns Emerging markets (USD and local currency) Investment grade corporates High yield bonds Distressed bonds Inflation-linked Bank loans Interest rate swaps Yield curve trades Credit default swaps (CDS) U.S. Treasury bills Non-U.S. government bills Foreign exchange forwards Foreign exchange options Convertible bonds Private placements Real estate investment trusts Precious metals-related securities Structured notes Short sales (up to 20% of NAV) As of December 31, Source: BlackRock. 10

11 GA_I Reference benchmark The reference benchmark serves as a performance standard. It does not, however, represent the team s entire investment universe. Consistent benchmark since the fund s inception in 1989: Represents a neutral asset mix and a way to communicate overweight and underweight positions Portfolio is unconstrained relative to benchmark: Asset allocation is driven largely by relative valuations and absolute risk across asset classes, regions, currencies, sectors, and securities Risk is primarily defined as the chance of permanent loss of capital : Relative risk measures, such as standard deviation and beta, are closely monitored, but are not comprehensive risk indicators. The realized volatilities of the fund and reference benchmark have tracked each other closely across market cycles. Reference benchmark 16% Annualized standard deviation since inception 12% 36% 9.5% 9.1% 24% 24% S&P 500 FTSE World ex-u.s. BofA/ML Current 5-Yr U.S. Treasury Citi Non-USD World Gov't Bond 6% Neutral asset class allocation Neutral regional allocation 60% Stocks 40% Bonds 60% U.S. 40% Non-U.S. 0% Global Allocation Fund (I) Reference Benchmark Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock. Standard deviation is calculated based on monthly returns for the BlackRock Global Allocation Fund (Institutional) from first full month post inception (February 28, 1989). Other share classes will vary. The indexes are unmanaged and do not take transaction charges into consideration. It is not possible to invest directly in an index. Volatility is based on standard deviation, which is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. 11

12 Flexibility in practice Portfolio composition The fund was underweight equities relative to its benchmark for most of the 1990s One of the largest equity overweights in the fund s history was H2 01 Cash equivalents have regularly been held since inception 100% 80% 60% 40% 20% 0% Benchmark Jun-90 Jun-91 Jun-92 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Equities Fixed Income Commodity-Related Cash Equivalents Jun-14 Jun-15 Jun-16 Jun-17 As of December 31, Source: BlackRock. Subject to change. The fund is not a balanced product, as its weightings are not rigidly adhered to. The fund is actively managed and its characteristics will vary. Prior to 2015, the fund s exposure was based on market value and adjusted for the economic value of futures and swaps. From 2015, the fund s exposure is based on the economic value of securities and is adjusted for futures, options, swaps (except with respect to fixed income securities) and convertible bonds. Prior to 2015, commodity-related exposure, which is comprised of precious metals ETFs, was included in equities. Benchmark referred to is the reference benchmark, which consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 12

13 Flexibility in practice Portfolio composition 100% The team added to U.S. equities due to attractive valuations and a recovering global economy The team emphasized highquality government bonds in response to tightening spreads and concerns around financial and household leverage The team increased exposure to commodity-related securities prior to the global credit crisis and further added as central bank balance sheets expanded The team added to international equities due to attractive valuations and accommodative monetary policies 80% 60% 40% 20% 0% Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 U.S. Equities Developed Equities ex-u.s. Emerging Market Equities Commodity-Related U.S. Treasuries & Agencies U.S. TIPS U.S. Credit Non U.S. Sovereign Debt Non U.S. Credit Cash Equivalents As of December 31, Source: BlackRock. Subject to change. Asset allocation strategies do not assure profit and do not protect against loss. Prior to 2015, the fund s exposure was based on market value and adjusted for the economic value of futures and swaps. From 2015, the fund s exposure is based on the economic value of securities and is adjusted for futures, options, swaps (except with respect to fixed income securities), and convertible bonds. Prior to 2006, commodity-related exposure was included in equities. Commodity-related is comprised of precious metals ETFs. Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 13

14 One of the most experienced global multi-asset teams* * Source: Morningstar. The fund has one of the longest Manager Tenure as defined by Morningstar among funds in Morningstar s World Allocation category.

15 More than 50 individuals are dedicated to Global Allocation platform Portfolio managers guide asset allocation & risk management of the fund Managed by one of the most experienced global multi-asset teams* Drawing on the breadth and depth of BlackRock s resources Dan Chamby, CFA Portfolio Manager Russ Koesterich, CFA, JD Portfolio Manager Size 50+ dedicated professionals, including 10 senior investors and 18 analysts focused on bottom-up security selection Multi-Asset Strategies Risk & Quantitative Analysis BlackRock Investment Institute David Clayton, CFA, JD Portfolio Manager Kent Hogshire, CFA Portfolio Manager Experience Longevity 28 CFA charterholders 6 team members with prior portfolio management experience 7 languages spoken Daily Global Meeting Aladdin Platform Technology Trading As of December 31, * Source: Morningstar. The fund has one of the longest Manager Tenure as defined by Morningstar among funds in Morningstar s World Allocation category. 15

16 Global Allocation portfolio management team Global Allocation portfolio management team Global Platform Portfolio Management** Macro Strategy Lisa O Donnell, JD 30 yrs experience Head of Global Allocation Team David Clayton, CFA, JD 23 yrs experience Portfolio Manager Dan Chamby, CFA 32 yrs experience Portfolio Manager Russ Koesterich, CFA, JD 22 yrs experience Portfolio Manager Kent Hogshire, CFA 17 yrs experience Portfolio Manager Mike Trudel, CFA, JD 20 yrs experience Global Macro Strategist Analysts Senior Investors Analysts Eric Bae Ariana Berry, JD* Randy Berkowitz, CFA* Kevin Bynum, CFA Mike Carlucci Miguel Crivelli, CFA Matt Gerard, CFA Sam Indyawan, CFA* Lindsay Klitsch, CFA Ben Moyer, CFA 36 yrs experience Asia Pacific Greg Spencer 27 yrs experience Credit, Consumer Discretionary, Telecommunication Services Aldo Roldan, Ph.D 32 yrs experience Sovereign Bonds, EM Debt, Currencies Mike Walsh, CFA 27 yrs experience Fixed Income, Derivatives Kate Brady Rauscher, CFA 31 yrs experience Utilities, Financials Daniel Daniel, CFA, CMT 19 yrs experience Consumer Discretionary, Financials, Industrials, Information Technology, Utilities Eric Mitofsky 30 yrs experience Quantitative Analysis, Derivatives Eric Kisslinger 17 yrs experience Quantitative Analysis, Systematic Investing Lisa Walker, CFA 29 yrs experience Financials Patrick Edelmann, CFA 16 yrs experience Consumer Staples, Energy, Healthcare, Materials, Real Estate Matt Litwin, CFA Isabelle Liu Jonathan Lux, CFA Chirayu Patel, CFA Reid Ross, CFA Christopher Strayer* Paul de Vassal Sonia Wang, CFA Angela Yu, CFA Marketing Strategy & Communications Judy Rice 19 yrs experience Senior Marketing Strategist Erica Quinn, CFA Matt Callahan, CFA Melissa Barnett* Christopher Strayer* Enterprise Management Portfolio Construction Portfolio Implementation Product Strategy Cheryl Domenech 17 yrs experience Chief Operating Officer Ariana Berry, JD* Portfolio Oversight Ken DaPonte Business Management Randy Berkowitz, CFA* 13 yrs experience Portfolio Construction & Risk Management Sam Indyawan, CFA* 9 yrs experience Portfolio Construction & Risk Management Marie Dwyer 32 yrs experience Senior Manager Pete Mathern Kim Moore Andy Nielsen Doug Smith Oscar Pulido, CFA 16 yrs experience Senior Product Strategist Matt Estes Brian Miller, CFA Noah Kroll Meghan Colarusso, CFA Simon Rafferty Melissa Barnett* As of December 31, * Individual with dual role. Former Global Allocation portfolio manager. Investment Group Leader. 16

17 Investment process combines security selection & asset allocation Asset Allocation Security Selection Strategic Asset Allocation Risk Management Analyst Security Submission Peer Discussion PM Evaluation Position Sizing of Approved Securities Fundamental Security Implementation Tactical Completion / Rebalancing As of December 31, Current process for selecting investments in the fund s portfolio in accordance with its stated investment objectives and policies. Subject to change based on market conditions, portfolio manager s opinion and other factors. 17

18 Risk & Quantitative Analysis (RQA) provides objectivity & independence RQA monitors dozens of active risk factors globally on a continuous basis Helps Global Allocation team ensure the portfolio is not unintentionally overexposed to specific top-down factors Risk cannot (and should not) be entirely eliminated, but it can (and must) be identified Risk Assessment Stress Testing Allows the PM team to pro-actively estimate how changes in identified market prices affect the portfolio in relative and absolute terms Enables team to quantify portfolio effects of specific market scenarios rather, than relying on intuition RQA Review cumulative effect of investment decisions to identify factors contributing to, and subtracting from, alpha generation Comprehensive portfolio attribution includes asset class, country, sector, currency, and individual security analysis Performance Attribution Risk Alignment Regularly scheduled meetings between RQA and Global Allocation team help ensure current portfolio positioning is consistent with team s market views As of December 31,

19 Proven record of growing assets and managing volatility

20 GA_I The benefits of active management Proven record of growing & protecting over the long term (Inception through December 2017) 1600% Higher Return/Lower Volatility Global Allocation Fund (I) Large Cap U.S. Stocks Higher Return/Higher Volatility Emerging Market Stocks Small Cap U.S. Stocks Cumulative Return 1200% U.S. Convertibles European Stocks Asia ex-japan Stocks U.S. High Yield 800% Reference Benchmark* U.S. Credit Global Stocks Morningstar World 10-Year U.S Allocation Category Treasury Bonds 400% 5-Year Treasury Bonds Global Gov't Non-U.S. Gov't Bonds Bonds Gold Developed ex-u.s. Stocks Cash Commodities Japanese Stocks 0% Lower Return/Lower Volatility Lower Return/Higher Volatility 0% 5% 10% 15% 20% 25% Risk (Ann. Standard Deviation) Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns are net of fees and include reinvestment of dividends and capital gains. Returns calculated from first full month post inception (February 28, 1989). Morningstar category returns are based on total return and do not reflect sales charges. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. See Important Notes for index descriptions. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 20

21 GA_I Experience that has weathered bull & bear markets Cumulative total returns 300% 250% 200% 150% 100% 50% 0% -50% Technology Bubble Global Market Recovery Global Credit Crisis Global Easing Cycle /31/17 Combined Period /31/17 Global Allocation Fund (I) 2.62% % -2.84% 61.18% % Reference Benchmark* % 79.67% -6.87% 78.78% % Global Stocks % % % % % Global Bonds 20.19% 39.03% 13.71% 14.42% % Morningstar Category -7.72% 97.54% % 49.93% % Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns are net of fees and include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Global stocks represented by the FTSE World Index and global bonds by the Citigroup World Government Bond Index. Morningstar category refers to the Morningstar World Allocation category average. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 21

22 GA_I A history of competitive performance and limited drawdowns Global Allocation Fund (I) Global Bonds Reference Benchmark* U.S. Stocks Global Stocks 134.3% Best 3-Year Return (Cumulative) 87.1% 95.1% 53.5% 62.4% Average 3-Year Return (Cumulative) 34% 19% 26% 38% 28% Worst 3-Year Return (Cumulative) -6.5% -9.6% -19.4% -40.9% -43.4% # of Negative 3-Year Periods Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns calculated from first full month post inception (February 28, 1989). Returns include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Global bonds represented by the Citigroup World Government Bond Index, U.S. stocks by the S&P 500 Index, and global stocks by the FTSE World Index. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 22

23 Current portfolio positioning and performance

24 Portfolio snapshot as of December 31, 2017 Equities: 62% (Overweight) Overweight: Regions: Japan, Europe Sectors: Energy, Consumer Discretionary, Telecommunications, Info Tech, Utilities, Materials Underweight: Regions: U.S. Sectors: Financials, Consumer Staples, Industrials, Healthcare, Real Estate Fixed Income: 31% (Underweight) Overweight: Corporates, Emerging Market Debt Underweight: U.S. Treasuries, Japanese Government Bonds, European Sovereign Debt Commodity-Related: 4% (Overweight) Precious metal ETFs Cash Equivalents: 3% (Overweight) Actively managed, both USD and non-usd Asset allocation (as % of net assets*) 19% 4% 3% 12% 30% 32% Currency allocation (as % of net assets) 3% 4% 9% 13% 5% 2% 2% 62% U.S. Equities Non-U.S. Equities U.S. Fixed Income Non-U.S. Fixed Income Commodity-Related Cash Equivalents U.S. Dollar Euro British Pound Sterling Other Europe Japanese Yen Other Asia Latin America Rest of the World As of December 31, Source: BlackRock. Subject to change. The fund is actively managed and its characteristics will vary. Overweight/underweight indicators are relative to fund s reference benchmark, which consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. * % of net assets represents the fund s exposure based on the economic value of securities and is adjusted for futures, options and swaps (except with respect to fixed income securities) and convertible bonds. 24

25 GA_I Performance as of December 31, 2017 Annualized total returns Morningstar Analyst Rating Morningstar has awarded the fund a Silver rating (last rating 6/22/17). See Important Notes for more information. 30% 25% 20% 15% 10% 5% 0% -5% YTD 1 Year 3 Years 5 Years 10 Years 15 Years Global Allocation Fund (I) 13.60% 13.60% 5.45% 6.56% 4.59% 9.07% Reference Benchmark* 15.69% 15.69% 6.78% 7.59% 5.23% 7.58% Global Stocks 24.08% 24.08% 9.96% 11.67% 5.45% 9.64% Global Bonds 7.50% 7.50% 1.74% 0.13% 2.67% 4.03% Morningstar Category 14.79% 14.79% 5.18% 5.90% 4.22% 7.13% Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. Refer to blackrock.com for current month-end performance. Investment returns reflect total fund operating expenses, net of all fees, waivers and/or expense reimbursement. Total annual fund operating expenses as stated in the fund s most recent prospectus are 0.89% for Institutional shares. Net annual fund operating expenses (including investment related expenses) are 0.81% for Institutional shares. The difference between the fund s total and net expense ratios is due to fees that BlackRock has agreed to contractually waive through February 28, 2019, and any voluntary fee waivers. Such waivers may be terminated upon 90 days notice by the fund s board of directors or by a shareholder vote. Any voluntary fee waivers may be terminated at any time without notice. As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns are net of fees and include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Global stocks represented by the FTSE World Index and global bonds by the Citigroup World Government Bond Index. Morningstar category refers to the Morningstar World Allocation category average. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. Periods less than 1 year are not annualized. 25

26 GA_I Consistently outperformed over the long-term Frequency of outperformance over rolling periods since inception 100% The longer the time horizon, the higher the frequency of outperformance vs. the benchmark and peer group 100% 100% 100% 94% 95% 87% 80% 60% 70% 67% 68% 72% 40% 20% 335 total observations 311 total observations 287 total observations 227 total observations 167 total observations 0% Rolling 1-Year Rolling 3-Year Rolling 5-Year Rolling 10-Year Rolling 15-Year Global Allocation Fund (I) vs. Reference Benchmark* Global Allocation Fund (I) vs. Morningstar Category Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns calculated from first full month post inception (February 28, 1989). Returns are net of fees and include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Morningstar category refers to the Morningstar World Allocation category average. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5- Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 26

27 So what do I do with my money?

28 GA_I Global Allocation Fund has provided growth over the long-term Growth of a hypothetical $10,000* investment since inception $160,000 $156,610 $120,000 $80,000 $84,928 $80,860 $80,808 $49,881 $40,000 $24,562 $ Global Allocation Fund (I) Reference Benchmark* Global Stocks Global Bonds Morningstar Category Cash Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Illustration is based on a hypothetical investment of $10,000 on February 28, 1989 (first full month post inception). Returns are net of fees and include reinvestment of dividends and capital gains. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Global stocks represented by the FTSE World Index, global bonds by the Citigroup World Government Bond Index, and cash by the BofA/ML 3-Month T Bill Index. Morningstar category refers to the Morningstar World Allocation category average. * Reference benchmark consists of 36% S&P 500 Index, 24% FTSE World (ex-u.s.) Index, 24% BofA/ML Current 5-Year U.S. Treasury Index, 16% Citigroup Non-USD World Government Bond Index. 28

29 GA_I Global Allocation Fund has served as a source of income Inflation-adjusted withdrawal scenario for $100,000 investment in Global Allocation Fund $1,500,000 $1,200,000 Withdrawal Rate Total Withdrawals Ending Value Buy & Hold $0 $1,566,099 2% $90,438 $1,253,452 4% $180,875 $940,805 6% $271,313 $628,159 $900,000 $600,000 $300,000 $ Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns are net of fees and include reinvestment of dividends and capital gains. Methodology: Assumes a $100,000 investment at first full month post inception (February 28, 1989) and a lump sum withdrawal on December 31 of each year. The size of the initial withdrawal is equal to the withdrawal rate times the initial investment, and each year that amount is increased by 3% to account for inflation. Does not consider taxes. Results are hypothetical and will vary based on selection of other time frames and over time as assumptions change. These figures are for illustrative purposes only. 29

30 GA_I Global Allocation Fund has improved the risk-adjusted return of a portfolio Adding Global Allocation Fund to a balanced portfolio (Inception through December 2017) 10.5% 100% Global Allocation Fund (I) 9.5% Annualized Return 8.5% 50% / 50% 7.5% 100% Balanced Portfolio* 6.5% 9.25% 9.50% 9.75% 10.00% Risk (Ann. Standard Deviation) Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Morningstar. The performance depicted above is for the BlackRock Global Allocation Fund (Institutional). Other share classes will vary. Returns calculated from first full month post inception (February 28, 1989). Returns are net of fees and include reinvestment of dividends and capital gains. * Balanced portfolio is based on an allocation of 60% Morningstar World Stock category and 40% Morningstar World Bond category, rebalanced quarterly. 30

31 GA_I What makes the Global Allocation Fund unique? Unconstrained in search of opportunity One of the most experienced global multi-asset teams* Proven record of growing assets and managing volatility Diversified portfolio invested in 700+ securities across 40+ countries and 30+ currencies Combines traditional and non-traditional asset classes and investments across the capital structure Ability to deviate from benchmark to capture opportunity and manage risk 50+ person dedicated team with proven stability Portfolio manager team approach since fund inception in 1989 Portfolio managers and senior investors average over 20 years of investment experience Compelling risk-adjusted results for more than 28 years Superior downside capture history relative to 60/40 portfolios Independent risk management Flexibility to adapt as markets change Experience through bull & bear markets Historical returns in excess of global stocks with one-third less volatility Performance data quoted represents past performance and does not guarantee future results. As of December 31, Source: BlackRock, Bloomberg, Morningstar. * Source: Morningstar The fund has one of the longest Manager Tenure as defined by Morningstar among funds in Morningstar s World Allocation category. From first full month post inception (February 28, 1989) through December 31, 2017, downside capture of the fund (Institutional) relative to the FTSE World Index is 43%. Over the same period, downside capture of a hypothetical portfolio comprised of 60% Morningstar World Stock category and 40% Morningstar World Bond category is 56%. Volatility is measured by standard deviation. From first full month post inception (February 28, 1989) through December 31, 2017, annualized standard deviation based on monthly returns is 9.6% for the fund (Institutional) and 15.0% for global stocks (represented by the FTSE World Index). 31

32 Important notes Index Descriptions: Indexes are unmanaged. You cannot invest directly in an index. Morningstar Peer Group: Refers to Morningstar World Allocation Category. Cash: BofA/ML U.S. Treasury Bill 3-Month Index, an unmanaged index based on the value of a 3-month Treasury bill assumed to be purchased at the beginning of the month and rolled into another single issue at the end of the month. Gold: S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold future. Commodities: S&P Goldman Sachs Commodity Index, a composite index of commodity sector returns, representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. 5-Year Treasury Bonds and 10-Year Treasury Bonds: BofA/ML 5-Year U.S. Treasury Bond Index and BofA/ML 10-Year U.S. Treasury Bond Index, respectively, are unmanaged indices designed to track the total return of the current coupon 5- year U.S. Treasury bonds and 10-year U.S. Treasury bonds. U.S. Treasury securities are direct obligations of the U.S. government and are backed by the full faith and credit of the U.S. government if held to maturity. U.S. Credit: Barclays U.S. Credit Index, an unmanaged index considered representative of publicly issued, SEC-registered U.S. corporate and specified foreign debentures and secured notes. U.S. Convertibles: BofA/ML All U.S. Convertible Bond Index, a market capitalization-weighted index of domestic U.S. corporate convertible securities including mandatory convertible preferreds. U.S. High Yield: Barclays U.S. High Yield Index, which covers the universe of fixed rate, non-investment-grade debt. Global Government Bonds: Citigroup World Government Bond Index, which includes the most significant and liquid government bond markets globally that carry at least an investment grade rating. Currently, this includes all countries in the Citigroup EMU Governments Index (EGBI) and Australia, Canada, Denmark, Japan, Sweden, Switzerland, United Kingdom and the United States. Index weights are based on the market capitalization of qualifying outstanding debt stocks. Non-U.S. Government Bonds: Citigroup Non-U.S. Dollar World Government Bond Index, an unmanaged, market-capitalization-weighted index that tracks 10 government bond indices, excluding the United States. Global Stocks: The FTSE World Index, a broad based capitalization weighted index comprised of 2,200 equities from 24 countries in 12 regions, including the United States. Large Cap U.S. Stocks: S&P 500 Index, which covers 500 of the largest companies of the U.S. markets (mostly NYSE issues). The unmanaged index represents about 75% of NYSE market capitalization and 30% of NYSE issues. Small Cap U.S. Stocks: Russell 2000 Index, a market-weighted index composed of approximately 2,000 common stocks issued by small-capitalization U.S. companies in a range of businesses. Developed ex-u.s. Stocks: MSCI EAFE Index, a broad market cap-weighted index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada. European Stocks: MSCI Europe Index, an unmanaged index considered representative of stocks in developed European countries. Japanese Stocks: MSCI Japan Index, an unmanaged index considered representative of stocks in Japan. Asia ex-japan Stocks: MSCI Pac-X Japan Index, an unmanaged index considered representative of stocks of Asia Pacific countries excluding Japan. Emerging Market Stocks: MSCI Emerging Markets Index, an unmanaged index considered representative of stocks in developing countries. 32

33 Important notes Principal risks: The fund is actively managed and its characteristics will vary. Stock and bond values fluctuate in price so the value of your investment can go down depending on market conditions. International investing involves special risks including, but not limited to currency fluctuations, illiquidity and volatility. These risks may be heightened for investments in emerging markets. Fixed income risks include interest rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. Non-investment grade debt securities (high yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities. Asset allocation strategies do not assure profit and do not protect against loss. Short selling entails special risks. If the fund makes short sales in securities that increase in value, the fund will lose value. Any loss on short positions may or may not be offset by investing short sale proceeds in other investments. The fund may use derivatives to hedge its investments or to seek to enhance returns. Derivatives entail risks relating to liquidity, leverage and credit that may reduce returns and increase volatility. The Morningstar Analyst Rating is not a credit or risk rating. It is a subjective evaluation performed by the manager research analysts of Morningstar. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price. Analysts use this five pillar evaluation to determine how they believe funds are likely to perform over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weighting of each pillar may vary. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflect an Analyst s conviction in a fund s prospects for outperformance. Analyst Ratings are continuously monitored and reevaluated at least every 14 months. The Morningstar Analyst Rating should not be used as the sole basis in evaluating a mutual fund. Morningstar Analyst Ratings involve unknown risks and uncertainties which may cause Morningstar's expectations not to occur or to differ significantly from what we expected. For more detailed information about Morningstar's Analyst Rating, including its methodology, please go to documents/methodologydocuments/analystratingforfundsmethodology.pdf. Ask your clients to consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The prospectus and summary prospectus contain this and other information about the fund and are available, along with information on other BlackRock funds, by calling or at blackrock.com. The prospectus and, if available, the summary prospectus should be read carefully before investing. Prepared by BlackRock Investments, LLC, member FINRA BlackRock, Inc. All rights reserved. BLACKROCK, ALADDIN and SO WHAT DO I DO WITH MY MONEY are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. 33