GMO 7-Year Asset Class Return Forecasts*

As of August 31, 2010

Stocks Bonds Other

8%
6.9%

5.9% 6.5% Long-term Historical U.S. Equity Return 6.0%

6%
Annual Real Return Over 7 Years

4.5%

4%
3.0%
2.2%
2% 1.4%
1.0% 1.0%

0%
-0.3% -0.2%

-1.3%
-2%
U.S. U.S. U.S. High Int'l. Int'l. Equities U.S. Bonds Int'l. Bonds Bonds Bonds U.S. Managed
equities equities Quality equities equities (emerging) (gov't.) (gov't.) (emerging) (inflation treasury Timber
(large cap) (small cap) (large cap) (small cap) indexed) (30 days to
2 yrs.)
Estimated Range of
7-Year Annualized Returns ±6.5 ±7.0 ±6.0 ±6.5 ±7.0 ±10.5 ±4.0 ±4.0 ±8.5 ±1.5 ±1.5 ±5.5

*The chart represents real return forecasts1 for several asset classes. These forecasts are forward-looking statements based upon the reasonable beliefs
of GMO and are not a guarantee of future performance. Actual results may differ materially from the forecasts above.
1 Long-term inflation assumption: 2.5% per year.

GMO
7YearForecast
Source: GMO 1
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