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CMA FIVE-YEAR OUTLOOK: 2019

RETURN/RISK TABLE & CORRELATION MATRIX

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ASSET CLASS (ROWS):

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FIXED INCOME
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EQUITY
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REAL ASSETS
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ALTERNATIVES

FIVE-YEAR CMA FORECAST:

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GEOMETRIC RETURN
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ARITHMETIC RETURN
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RISK

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              FIXED INCOME EQUITIES REAL ASSETS ALTERNATIVES
        FIVE-YEAR CMA FORECAST UNITED STATES EUROPE JAPAN UK CANADA AUSTRALIA GLOBAL DEVELOPED MARKETS EMERGING MARKETS GLOBAL
ASSET CLASS    
Benchmark		 Geometric Return Arithmetic Return Risk Cash                                                                              
FIXED INCOME UNITED STATES Cash FTSE Treasury Bill 3 Mon 1.1 1.1 0.4 1.00 Inflation
Linked		                                                                            
Inflation Linked BBgBarc Gbl Infl Linked US TIPS 2.6 2.8 5.9 0.02 1.00 Investment
Grade		                                                                          
Investment Grade BBgBarc US Agg Bond 3.0 3.1 3.4 0.03 0.79 1.00 High Yield                                                                        
High Yield BBgBarc US Corporate High Yield 5.0 5.4 8.9 -0.10 0.35 0.23 1.00 Municipal                                                                      
Municipal BBgBarc Municipal 1-10Y Blend 1-12Y 2.0 2.0 2.9 0.01 0.59 0.75 0.22 1.00 Cash                                                                    
EUROPE Cash JPM GBI Germany 3 Mon -0.3 0.2 9.9 0.10 0.37 0.25 0.39 0.11 1.00 Inflation
Linked		                                                                  
Inflation Linked BBgBarc Euro Govt Infl Lkd 1.0 1.7 12.0 0.05 0.54 0.44 0.46 0.27 0.91 1.00 Investment
Grade		                                                                
Investment Grade BBgBarc Euro Agg Bond 1.2 1.7 10.4 0.04 0.49 0.44 0.39 0.27 0.95 0.97 1.00 Cash                                                              
JAPAN Cash JPM GBI Japan 3 Mon -0.1 0.3 9.4 0.04 0.36 0.42 -0.07 0.38 0.22 0.23 0.27 1.00 Inflation
Linked		                                                            
Inflation Linked BBgBarc JPN Govt Infl Lkd 0.2 0.7 10.2 -0.01 0.55 0.53 0.17 0.45 0.32 0.38 0.38 0.90 1.00 Investment
Grade		                                                          
Investment Grade BBgBarc Japanese Aggregate 0.2 0.7 10.1 0.03 0.39 0.47 -0.08 0.41 0.22 0.25 0.29 0.98 0.90 1.00 Cash                                                        
UK Cash JPM GBI UK 3 Mon 0.3 0.7 9.0 0.10 0.22 0.02 0.42 -0.01 0.61 0.55 0.56 0.02 0.10 -0.01 1.00 Inflation
Linked		                                                      
Inflation Linked BBgBarc Gbl Infl Linked UK 2.2 2.8 10.9 0.02 0.58 0.43 0.50 0.28 0.55 0.62 0.60 0.15 0.32 0.17 0.67 1.00 Investment
Grade		                                                    
Investment Grade BBgBarc Sterling Agg 2.2 2.6 9.4 0.01 0.49 0.41 0.43 0.25 0.58 0.63 0.65 0.15 0.26 0.16 0.83 0.86 1.00 Cash                                                  
CANADA Cash FTSE TMX Canada 91 Day TBill 0.7 1.2 9.5 0.11 0.27 0.11 0.58 0.06 0.56 0.55 0.52 0.05 0.16 0.02 0.53 0.40 0.44 1.00 Inflation
Linked		                                                
Inflation Linked FTSE TMX Canada Real Return Bond 2.0 2.8 12.4 0.03 0.63 0.42 0.63 0.26 0.53 0.63 0.57 0.15 0.34 0.16 0.42 0.58 0.53 0.77 1.00 Investment
Grade		                                              
Investment Grade FTSE TMX Canada Universe Bond 2.6 3.1 9.6 0.07 0.50 0.40 0.62 0.27 0.58 0.64 0.62 0.17 0.31 0.16 0.48 0.52 0.55 0.93 0.88 1.00 High Yield                                            
High Yield ICE BofAML CA HY CA Isurs 4.5 5.3 12.3 0.03 0.28 0.19 0.61 0.02 0.57 0.59 0.57 0.02 0.14 0.01 0.53 0.45 0.52 0.88 0.75 0.87 1.00 Cash                                          
AUSTRALIA Cash JPM GBI Australia 3 Mon 0.8 1.6 12.7 0.05 0.44 0.27 0.58 0.12 0.71 0.70 0.69 0.13 0.27 0.12 0.56 0.54 0.56 0.72 0.74 0.75 0.75 1.00 Investment
Grade		                                        
Investment Grade BBgBarc Global Australia 2.2 2.9 12.1 0.03 0.58 0.46 0.54 0.28 0.71 0.74 0.74 0.26 0.41 0.27 0.50 0.59 0.61 0.67 0.76 0.77 0.69 0.96 1.00 Global
Aggregate		                                      
GLOBAL Global Aggregate BBgBarc Global Aggregate 2.1 2.3 5.6 0.05 0.70 0.73 0.35 0.52 0.77 0.85 0.87 0.61 0.70 0.64 0.44 0.63 0.66 0.44 0.60 0.63 0.49 0.63 0.75 1.00 Global
High Yield		                                    
Global High Yield BBgBarc Global High Yield 4.8 5.3 9.5 -0.08 0.43 0.29 0.97 0.25 0.54 0.62 0.56 -0.03 0.21 -0.04 0.51 0.58 0.53 0.65 0.69 0.70 0.68 0.68 0.65 0.49 1.00 Emerging
Market Debt		                                  
Emerging Markets Debt JPM GBI-EM Global Diversified 5.0 5.7 11.8 0.08 0.46 0.39 0.61 0.27 0.68 0.73 0.71 0.17 0.33 0.18 0.46 0.54 0.54 0.64 0.68 0.71 0.68 0.81 0.81 0.68 0.72 1.00 United
States		                                
EQUITIES DEVELOPED MARKETS United States MSCI USA IMI 5.7 6.7 13.9 -0.06 0.12 -0.01 0.70 -0.04 0.40 0.41 0.37 -0.21 -0.02 -0.23 0.38 0.33 0.34 0.58 0.53 0.56 0.62 0.57 0.51 0.22 0.71 0.55 1.00 Europe                              
Europe EUROPE ex UK IMI 6.0 7.9 19.2 0.03 0.17 0.07 0.71 0.01 0.63 0.63 0.60 -0.12 0.06 -0.13 0.52 0.45 0.48 0.60 0.57 0.61 0.66 0.66 0.59 0.42 0.77 0.69 0.86 1.00 Japan                            
Japan MSCI Japan IMI 4.5 5.6 14.9 -0.05 0.20 0.10 0.52 0.00 0.33 0.39 0.34 0.01 0.13 -0.04 0.35 0.34 0.33 0.46 0.47 0.48 0.49 0.49 0.45 0.28 0.56 0.51 0.63 0.64 1.00 United
Kingdom		                          
United Kingdom MSCI UK IMI 7.4 8.8 16.4 0.01 0.19 0.05 0.71 0.03 0.55 0.54 0.53 -0.14 0.02 -0.16 0.63 0.51 0.58 0.65 0.59 0.64 0.69 0.66 0.59 0.37 0.77 0.64 0.84 0.92 0.63 1.00 Canada                        
Canada MSCI Canada IMI 4.5 6.4 19.5 0.06 0.28 0.07 0.70 0.05 0.50 0.51 0.47 -0.06 0.09 -0.09 0.51 0.42 0.43 0.84 0.74 0.81 0.82 0.72 0.64 0.36 0.74 0.65 0.78 0.77 0.59 0.82 1.00 Australia                      
Australia MSCI Australia IMI 5.7 8.0 21.4 0.04 0.31 0.16 0.69 0.04 0.58 0.59 0.57 -0.06 0.12 -0.07 0.49 0.45 0.48 0.66 0.69 0.68 0.71 0.84 0.78 0.45 0.75 0.75 0.79 0.82 0.62 0.83 0.81 1.00 Developed
Markets		                    
Developed Markets MSCI World IMI 5.7 6.8 14.6 -0.02 0.18 0.04 0.74 -0.01 0.52 0.52 0.49 -0.16 0.03 -0.18 0.48 0.42 0.44 0.65 0.61 0.64 0.69 0.67 0.60 0.33 0.78 0.65 0.97 0.94 0.72 0.92 0.84 0.86 1.00 Asia                  
EMERGING MARKETS Asia EM ASIA IMI 5.5 7.7 21.0 0.06 0.25 0.12 0.67 0.02 0.47 0.50 0.46 -0.07 0.09 -0.09 0.42 0.39 0.41 0.61 0.63 0.64 0.66 0.71 0.65 0.37 0.71 0.69 0.74 0.80 0.63 0.76 0.78 0.82 0.82 1.00 Latin
America		                
Latin America EM LATIN AMERICA IMI 8.9 12.3 26.0 0.12 0.26 0.11 0.66 0.07 0.53 0.52 0.50 0.02 0.15 0.00 0.45 0.42 0.39 0.70 0.63 0.68 0.70 0.75 0.68 0.41 0.73 0.79 0.65 0.72 0.54 0.72 0.81 0.80 0.73 0.77 1.00 EMEA              
EMEA EM EMEA IMI 6.9 9.6 23.0 0.05 0.31 0.15 0.66 0.04 0.58 0.60 0.56 -0.01 0.14 -0.03 0.50 0.48 0.48 0.69 0.68 0.70 0.73 0.77 0.71 0.45 0.74 0.81 0.72 0.82 0.65 0.81 0.83 0.84 0.82 0.83 0.87 1.00 Emerging
Markets		            
Emerging Markets MSCI EM IMI 6.1 8.3 21.0 0.07 0.29 0.14 0.71 0.04 0.54 0.56 0.52 -0.04 0.12 -0.07 0.47 0.44 0.45 0.69 0.68 0.70 0.72 0.78 0.71 0.42 0.77 0.78 0.77 0.84 0.66 0.81 0.85 0.87 0.86 0.97 0.88 0.92 1.00 Global
Equities		          
GLOBAL Global Equities MSCI ACWI IMI 5.8 6.9 15.0 -0.01 0.20 0.05 0.75 0.00 0.53 0.54 0.50 -0.14 0.04 -0.17 0.49 0.43 0.45 0.67 0.63 0.66 0.71 0.70 0.62 0.35 0.79 0.68 0.96 0.94 0.72 0.92 0.86 0.88 1.00 0.86 0.77 0.85 0.89 1.00 Natural
Resources		        
REAL ASSETS Natural Resources S&P Global Natural Resources 6.1 8.1 19.9 0.10 0.24 0.02 0.58 -0.04 0.55 0.52 0.49 -0.02 0.08 -0.06 0.50 0.39 0.42 0.70 0.62 0.67 0.70 0.71 0.64 0.37 0.65 0.65 0.70 0.75 0.59 0.81 0.87 0.81 0.79 0.75 0.81 0.82 0.83 0.81 1.00 Listed
Real Estate		      
Listed Real Estate MSCI ACWI IMI Core RE 6.3 8.0 18.4 0.00 0.36 0.29 0.76 0.17 0.49 0.57 0.52 0.01 0.21 0.01 0.42 0.50 0.51 0.58 0.65 0.64 0.63 0.66 0.65 0.48 0.79 0.72 0.81 0.80 0.66 0.77 0.72 0.80 0.85 0.76 0.68 0.76 0.79 0.86 0.62 1.00 Listed
Infrastructure		    
Listed Infrastructure S&P Global Infrastructure 5.8 6.8 14.4 0.08 0.37 0.28 0.72 0.17 0.63 0.68 0.65 0.02 0.22 0.02 0.53 0.57 0.57 0.67 0.69 0.72 0.70 0.73 0.71 0.56 0.78 0.76 0.78 0.87 0.64 0.85 0.80 0.84 0.87 0.77 0.76 0.82 0.83 0.88 0.76 0.85 1.00 Hedge
Funds		  
ALTERNATIVES Hedge Funds HFRI Fund Weighted 3.7 3.9 5.7 0.05 0.22 0.03 0.73 0.00 0.46 0.47 0.43 -0.15 0.01 -0.17 0.49 0.44 0.44 0.66 0.63 0.65 0.70 0.67 0.59 0.30 0.76 0.61 0.84 0.84 0.69 0.86 0.88 0.82 0.90 0.85 0.77 0.83 0.88 0.91 0.83 0.75 0.81 1.00 Private
Equity
Private Equity Cambridge Associate Global Private Equity 7.7 9.2 17.2 0.06 0.01 -0.32 0.64 -0.28 0.44 0.45 0.35 -0.25 -0.12 -0.28 0.59 0.58 0.52 0.66 0.53 0.55 0.62 0.64 0.49 0.08 0.65 0.57 0.82 0.77 0.54 0.77 0.77 0.77 0.81 0.77 0.69 0.73 0.76 0.82 0.72 0.66 0.70 0.72 1.00

Forecasts listed here represent total return forecasts for primary asset classes, annualized using geometric and arithmetic averages, where applicable. Forecast returns are based on estimates and reflect subjective judgments and assumptions. They are not necessarily indicative of future performance, which could differ substantially. It is not possible to invest in an index.

IMPORTANT INFORMATION: The information is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. Northern Trust and its affiliates may have positions in and may effect transactions in the markets, contracts and related investments different than described in this information. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor.

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Capital Market Assumption (CMA) model expected returns do not show actual performance and are for illustrative purposes only. They do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. Stated return expectations may differ from an investor’s actual result. The assumptions, views, techniques and forecasts noted are subject to change without notice.

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