Download Document 1 - Hallandale Beach

City of Hallandale Beach
1st Quarter 2012 DB Plan
Update
May 16, 2012
1
Economy and Market Review
Recap 1st Quarter 2012
•
Global equity markets generally enjoyed strong and broad-based gains during the
first quarter of 2012
•
In the U.S., the S&P 500 Index gained 12.6% in the first quarter, its best first quarter
rally since 1998
•
International markets (as measured by the MSCI All Country World (ex-U.S.) Index)
gained 11.2% for the first quarter
•
–
International developed markets (as measured by the MSCI EAFE Index) gained 10.9% for
the quarter
–
International emerging markets (as measured by the MSCI Emerging Markets Index) gained
14.1% for the quarter
The combination of stronger economic news and a perception of a reduction of risk
provided a basis for many investors to turn to the higher returns in corporate bond
markets and equities; as a result, treasury yields trended upward during the quarter
–
The 10-year Treasury yield finished at 2.22%, up 34 basis points for the quarter
–
The 2-year Treasury yield finished at 0.34%, up 10 basis points for the quarter
Economy and Market Review
Recap 1st Quarter 2012
•
Consumer spending data was strong as overall household purchases rose ahead of
consensus expectations
•
Income data was a disappointment as, after inflation, disposable personal income fell
0.1% in February
•
Manufacturing momentum stalled as the Institute for Supply Management (ISM)
manufacturing index unexpectedly declined in January and purchasing managers
surveys were weaker
•
The mild European Union recession continued into 2012
•
Growth in China has slowed and economic data continues weak but a gradually
easing policy and strong fundamentals could provide for a soft landing
Economy and Market Review
Outlook for the Future
•
We anticipate a modest upward move in U.S. interest rates as the year progresses
and the expansion continues. Based on our outlook for better economic growth in the
second half, our interest rates forecast for year-end 2012 is:
– A Federal Funds Rate target of 0% to 0.25%
– A 10-year Treasury Rate of 2.50%
– A 2-year Treasury Rate of 0.40%
•
Core inflation was around 1.7% for year-end 2011. Our projection for year-end 2012
is around 2.5%.
•
Economic growth came in around 1.7% for 2011 and we expect it to tick up in 2012 to
around 2.2%
Economy and Market Review
Outlook for the Future
•
We believe the U.S. expansion is sustainable and should improve as the year
proceeds for several reasons:
– Firms have stretched their labor productivity as far as possible so further
increases in sales could mean employers will need to hire more workers
– The drag from shrinking state government budgets and layoffs should fade by
mid-year as state and local tax revenue moves up
– Housing activity appears to be bottoming
– Gross domestic income (GDI) grew during the first quarter showing that
underlying growth may be stronger than estimated using gross domestic product
(GDP)
•
The debt crisis in Europe will stay in the headlines and remain a risk for investors
•
The Chinese economy has slowed from white-hot to merely hot but appears headed
for a soft landing
Economy and Market Review
Disclosures
©2012 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 has been derived from sources believed to be accurate as of March 31, 2012. Information derived from
sources other than Principal Global Investors or its affiliates is believed to be reliable; however, we do not independently verify or guarantee its
accuracy or validity.
The information in this document 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. The general information it contains does not take account of any investor's
investment objectives, particular needs or financial situation, 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. All expressions of opinion and predictions in this document are subject to change
without notice.
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.
Economy and Market Review
Disclosures
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 (ex.U.S.) 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.
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.
t120416035b
PQ 4927
General Employee Plan –
Target Allocation By Asset Class
General Employee Plan –
Target Allocation By Investment Option
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General Employee Plan –
Target Allocation By Investment Option
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General Employee Plan –
Asset Allocation By Asset Class
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 – 3/31/2012
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Professional/Management Plan –
Target Allocation By Asset Class
Professional/Management Plan –
Target Allocation By Investment Option
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Professional/Management Plan –
Target Allocation By Investment Option
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Professional/Management Plan –
Asset Allocation By Asset Class
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 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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Professional/Management Plan
Performance – 3/31/2012
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