Epstein Secrets

Year Average Yield Weighted Average Treasury Yields (%) 0% . T T T T T T T T T T 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 KP Source: US Treasury. i USA Inc. | Income Statement Drilldown 165 Effective Interest Rates: If Debt Levels & Interest Rates Rise Dramatically Beyond 2010, Net Interest

s Helped Fuel It, Too, as They Reached For Yield Without Questioning AAA Ratings of A Subprime-Backed Investments Investors picked up 25-35bps over U.S. Treasuries with comparable maturity, typically levered 10:1 and generated 2.5-3.5% yield, meaningful against an 8% annual yield target Illustrative AAA-Rated S

Consider Review Tax Rates Changing MEE Reduce Subsidies / Tax Expenditures*/ eee Broaden Tax Base Note: *Tax subsidies / expenditures are losses to the U.S. Treasury from granting certain deductions, exemptions, or credits (such i as those on mortgage interest payments and employer-sponsored health insurance payme

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 —— Freddie Mac — Fannie Mae Note: HUD is Department of Housing and Urban Development. Source: FactSet. a USA Inc. | Income Statement Drilldown 196 HOUSE_OVERSIGHT_020939 Fannie Mae & Freddie Mac: Accounted for Majority of Total Residential Mortgage

kets over the medium term. Valuations remain attractive, and the potential for spreads to trend lower should more than offset the gradual increase in US Treasury yields in the quarters ahead. We continue to prefer increasing exposure to corporate bonds while keeping existing investments in sovereign bonds. 36

et revisions, in %; MSCI Europe) 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Jun.05 Jun.06 Jun.07 Jun.0&8 Jun.09 Jun.10 Jun.11 Jun.12 Source: FactSet, UBS CIO, as of 27 June 2012 Note: Past performance is no indication for future returns. 21 Please see important disclaimer and disclosures at the

. deduct.-recur.impact -3.50 -5.00 -6.00 Recurring impact 7.00 1.50 -3.50 One-time repat. tax 8.50 -8.50 Source: BofAML US Equity & Quant Strategy, FactSet, Compustat, S&P “Assumes end to interest deductibility only applies to new debt, where we estimate 70-90% of debt is long-term. Note: For this exhib

nonprofit educational facilities Education 660 Special Blue Cross/Blue Shield tax benefits Health 630 Source: BofAML US Equity & Quant Strategy, US Department of Treasury Immediate capex expensing should provide some initial cash tax benefits The shift to the immediate expensing of capital expenditures should provide