Exhibit 53: US Equity Performance Relative to Exhibit 54: US Equity and Bond Fund Flows Fixed Income Equities could benefit from rebalancing out of bonds given Stocks have outperformed bonds following periods of muted —_ lopsided flows since 2009. return differences. Total Return Difference Between Cumulative Fund Flows ($ bn} S&P 500 and 10-Year Treasury {%) 1,600 5 —— Bonds 10 1.200 --—-—-—- Equities 1,467 8 78 1,200 be 1,000 | be 800 4 600 400 2 at 200 at foe i gt EE a, aa wre, Difference Over Last 20 Years 3 Years 5 Years -200 = = TEL (19th Percentile Since 1945) “Median Retin biffereice Over Subsequent Time au! Period When Starting from Bottom 20th Percentile 2009 2010 2011 2012 2013 2014 2015 2016 Data as of December 31, 2016. Data through November 30, 2016. Source: Investment Strategy Group, Bloomberg, Leuthold Group. Note: Beginning in March 2009. Source: Investment Strategy Group, Bloomberg, ICI. expansion in the US economy (see Section II, in oil prices. Second, a shift to a 25% corporate tax United States). The state of the business cycle is a rate could add $9-10 to S&P 500 EPS in 2017 if key driver of market performance, evident in the enacted retroactively (see Exhibit 52). Finally, a tax tight linkage between the S&P 500 and the ISM holiday for the estimated $1 trillion of cash held Manufacturing Index (see Exhibit 51). Notably, the overseas could lead to an additional $1-2 of EPS S&P 500 has generated positive annual total returns upside from repatriation-driven buybacks. 86% of the time during economic expansions in the There are also other, less visible potential post-WWII period, while suffering annual declines catalysts for equities. Over the last 20 years, the of greater than 10% just 4% of the time. During total return of stocks has exceeded that of 10-year the same postwar period, nearly three-fourths of the Treasury bonds by only 2 percentage points, well bear markets—defined here as declines of 20% or below the historical average of 4.4 perc