1 City of Hallandale Beach 2nd Quarter 2011 DB Plan Update September 14, 2011
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City of Hallandale Beach2nd Quarter 2011 DB Plan Update
September 14, 2011
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Economy and Market Review
• After battling both dramatic ups and downs during the second quarter and surges of rampant pessimism, equity markets finished the quarter mostly where they started
• In the U.S., the S&P 500 Index rose 0.1% in the second quarter
• Global markets (as measured by the MSCI All Country World Index) were up 0.4% for the quarter
– Global developed markets (as measured by the MSCI EAFE Index) were up 1.8%
– Global emerging markets (as measured by the MSCI Emerging Markets Index) fell 1.0%
• Yields on U.S. government bonds fell during the quarter
– The 10-year Treasury yield finished at 3.16% (down 31 basis points)
– The 2-year Treasury yield finished at .46% (down 37 basis points)
Recap 2nd Quarter 2011
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Economy and Market Review
• The soft patch continued but there are hints of renewed strength, resilience and better news ahead despite some headwinds
• Housing is stabilizing– Pending home sales soared 8.8% in May– The inventory of new homes for sale is at 60-year record lows
• Improving investment, sales and output in Japan will be a positive force for global production
• Exports plus strong business investment in equipment and software have been an impetus for growth
• The national ISM PMI* jumped 1.8 points to 55.3 indicating expansion in the manufacturing sector for the 23rd consecutive month
• Potential headwinds include:– Inflation in emerging markets leading to tighter monetary policy; may slow the U.S.
export boom– Consumer’s financial caution and trend to more savings may persist, slowing consumer
spending growth– Federal policy or debate that business interprets as unfriendly may inhibit hiring and
investment *Institute for Supply Management Purchasing Managers Index
Recap 2nd Quarter 2011
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• In our opinion, based on current inflation and growth projections, we expect interest rates at the end of calendar year 2011 to be as follows:
– A Federal Funds Rate target of 0% to 0.25%– A 10-year Treasury Rate of 3.75%– A 2-year Treasury Rate of 1.00%
• Core inflation was around 1.0% for year-end 2010; our projection has ticked down slightly for year-end 2011 from the first quarter to 1.5% and remains at 1.8% for 2012
• Based on developments during the quarter we have lowered our expectations for economic growth to around 2.4% in 2011 and around 2.9% in 2012
Outlook for the Future
Economy and Market Review
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• Despites structural headwinds, we believe the U.S. economy will return to trend growth of 3.0% to 3.25% in the second half of 2011 due to the following factors:
• Drags from the reduction in construction and state and local spending will finally fade away
• Profit growth is still spectacular and companies have plenty of cash
• Monetary policy remains wildly accommodative
• The global expansion should persist and strengthen over the coming quarters
• There are no signs the expansion is close to maturity– Inflation is still low and the Fed is not raising rates– Inventories are small relative to sales– Debt is falling not reaching new peaks– Wages are rising but unit labor costs are falling so businesses don’t have a cost reason
to curb output
Economy and Market ReviewOutlook for the Future
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©2011 Principal Financial Services, Inc.
No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group®.
Information provided by Principal Global Investors, a member of the Principal Financial Group.
The information in this document is given in good faith and has been derived from sources believed to be accurate as of July 2011. It contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. Nor should it be relied upon in any way as forecast or guarantee of future events regarding a particular investment or the markets in general. The general information it contains does not take account of any investor's investment objectives, particular needs or financial situation.
Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions in this document.
All figures shown in this document are in U.S. dollars unless otherwise noted.
Standard & Poor's 500 Index is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market.The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. MSCI - EAFE Index NDTR D is listed for foreign stock funds (EAFE refers to Europe, Australia, and Far East). Widely accepted as a benchmark for International stock performance, the EAFE Index is an aggregate of 21 individual country indexes.MSCI - Emerging Markets NDTR D Index measures equity market performance in the global emerging markets. It consists of 26 emerging market countries in Europe, Latin America and the Pacific Basin.
Disclosures
Economy and Market Review
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Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment.Insurance products and plan administrative services are provided by Principal Life Insurance Company. Principal Life and Principal Global
Investors are members of the Principal Financial Group, Des Moines, IA 50392.
t11071503of
PQ 4927
Disclosures
Economy and Market Review
General Employee Plan –Target Allocation By Asset Class
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General Employee Plan –Target Allocation By Investment Option
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General Employee Plan – Target Allocation By Investment Option
General Employee Plan –Asset Allocation By Asset Class
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General Employee Plan –Asset Allocation By Investment Option
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General Employee Plan – Asset Allocation By Investment Option
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General Employee Plan International Exposure
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Investment Option by Style Box
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Investment Option by Style Box
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General Employee Plan Performance – 6/30/2011
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General Employee Plan Performance – 6/30/2011
Professional/Management Plan –Target Allocation By Asset Class
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Professional/Management Plan –Target Allocation By Investment Option
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Professional/Management Plan – Target Allocation By Investment Option
Professional/Management Plan –Asset Allocation By Asset Class
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Professional/Management Plan –Asset Allocation By Investment Option
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Professional/Management Plan – Asset Allocation By Investment Option
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Professional/Management PlanInternational Exposure
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Investment Option by Style Box
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Investment Option by Style Box
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Professional/Management Plan Performance – 6/30/2011
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Professional/Management Plan Performance – 6/30/2011
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