Cash Flow Generation We find that most plans seek to satisfy benefit payments on a monthly basis using a combination of available cash and rebalancing opportunities. While this process may be sufficient during calm markets, we believe a cash flow solution can be additive to meeting ongoing benefit payments needs, especially during times of market stress (e.g. to avoid having to sell equities at depressed prices) and as plans mature (e.g. monthly benefit payments become a larger portion of plan assets). By allocating to a structured cash flow solution to help cover near-term benefit payments, there will be a greater likelihood of meeting cash flow needs. To avoid eroding the interest rate hedge or the expected return of the portfolio, we suggest combining a cash flow solution to a capital efficient LDI structure (e.g. using Treasury STRIPS or overlays). Sources: Bloomberg, Barclays, Citigroup, Standard & Poor's, Loomis Sayles. Analysts shown from 12/31/2000-12/31/2018Charts are illustrative for presentation purposes only. Immunized solution is constructed using high yield corporate bonds with maturity less than 5 years to improve cash flow profile during initial years to benefit payments. Allocation relative to 12-year duration liability stream, discounted using Citigroup AA pension discount curve. The ability of an actual portfolio to deliver the required cash flows is not guaranteed and is subject to a variety of factors including, but not limited to, the availability of bonds, active management and trading, transaction costs, default risk, reinvestment risk, rebalancing risk and liquidity risk. Commodity, interest and derivative trading involves substantial risk of loss. Any investment that has the possibility for profits also has the possibility of losses, including loss of principle. This is for informational purposes only and should not be construed as investment advice. Investment decisions should consider the individual circumstances of the particular investor. Any opinions or forecasts contained herein reflect subjective judgments and assumptions of the author and do not necessarily reflect the views of Loomis, Sayles & Company, L. P. Investment recommendations may be inconsistent with these opinions. There can be no assurance that developments will transpire as forecasted. Examples and analysis are provided for illustrative purposes only and do not represent actual accounts. Accuracy of data is not guaranteed but represents our best judgment and can be derived from a variety of sources. Opinions are subject to change at any time without notice.