Chart 3: Decomposition of performance of 1) S&P 500 stocks exposed to fiscal stimulus* and 2) top 50 S&P 500 stocks with the highest L12M effective tax rates, vs. rest of S&P 500 (1/31/16-1/23/17) 25% 20% 19% 20% 28 15% 15% 15% 18% IVA nO 10% . 4 5 9% 5% 2D 8% 0% Stimulus Beneficiaries S&P 500 ex-Stimulus High Effective Tax Rate S&P 500 ex-High Eff Tax Beneficiaries List Rate List mChginPE ChginEPS Performance *Stocks identified by BofAML analysts as stimulus beneficiaries in 150 stocks with exposure to the Fiscal Stimulus theme 21 Aug. 2016 Source: FactSet, BofA Merrill Lynch US Equity & US Quant Strategy Potential beneficiaries: See Table 19 at the end of this report for a screen of domestically-oriented companies with high effective tax rates which could potentially benefit from a lower corporate tax rate. Repatriation Repatriation likely under both Blueprint and Trump plans Mandatory tax on overseas profits of 8.75% under Blueprint, 10% under Trump The US currently operates under a tax system in which the domestic earnings of US corporates are taxed at the federal US corporate rate (35%) and any overseas earnings that are repatriated are taxed at this rate less a credit for foreign taxes paid on those same earnings. Many multinationals’ foreign earnings thus remain parked offshore, allowing corporations to avoid the tax hit associated with bringing them back to the US. Both Trump and the House (under Ryan) have proposed a mandatory tax of overseas earnings of US firms’ foreign subsidiaries at reduced rates, such that this cash can be brought back and put to work in the US. This differs from the 2004 repatriation tax holiday, which was optional. Under the Blueprint, accumulated overseas earnings will be subject to a transition tax of 8.75%! (for those held in cash/cash equivalents) or 3.5% (for all other holdings), with companies able to pay the tax liability over an eight-year period. This would be part of broader tax reform, where a proposed territorial tax sys