Advisory Committee Agenda
February 8, 2012 Archives Building
Salem, OR 9:30 a.m.
ITEM # ITEM PRESENTER I.
Introduction
Peter Farrelly, Chair
II.
Approval of Minutes
Peter Farrelly, Chair
III.
Old Business
None
IV. Administrative report A. Q4 2011 Service Review, Field Activities,
and Investment Update, B. Financial Engines Advice Provision C. Q4 2011 Performance Report
D. Update on Survey for Auto Enrollment,
Committee Terms, Plan Update, Schwab Report
E. State Q4 2011 Status F. Local Government Q4 2011 Status G. Q4 2011 and Plan Statistics
Brian Merrick and Justin Naegle, ING Jay Young, ING Gay Lynn Bath, OSGP and Michael Doto, ING Mike Viteri and Ben Mahon, Treasury, and Jake O’Shaughnessy, Arnerich Massena Gay Lynn Bath, OSGP Karen Blanton, OSGP Jack Schafroth, OSGP Kathy Gannon, OSGP
V.
New Business
Peter Farrelly, Chair
VI.
Audience Participation
Peter Farrelly, Chair
VII. Adjournment The next meeting is scheduled for May 9, 2012, in Tigard.
Peter Farrelly, Chair
On-line versions of the materials are made available to the committee and to the public at
www.oregon.gov/pers/osgp one week prior to the meeting. Hard copies are available at the meetings.
If you have a disability that requires any special material, services or assistance please call (503) 378-8979 at least 48 hours before the meeting.
• Peter Farrelly, Chair • John Lattimer, Vice Chair • Bob Swank • Priyanka Shukla • Keith Baldwin • Sharlyn Rayment • Brian Burleigh
Oregon Savings Growth Plan Page 1 Advisory Committee Meeting Minutes November 3, 2011
DRAFT
ADVISORY COMMITTEE MEETING MINUTES November 3, 2011
PERS HEADQUARTERS TIGARD OREGON
COMMITTEE MEMBERS PRESENT STAFF MEMBERS PRESENTPeter Farrelly, Chair Jon DuFrene, PERS Keith Baldwin, Committee Member Gay Lynn Bath, Manager Priyanka Shukla, Committee Member Denise Helms, Assistant to Manager Sharlyn Rayment, Committee Member Karen Blanton, Educational Representative Kathy Gannon, Program Coordinator
I. INTRODUCTION: Call to order by Chair Farrelly at 9:30 a.m. Chair Farrelly asked for introductions.
II. APPROVAL OF MINUTES: Chair Farrelly asked for any changes to the minutes from the August 10, 2011 meeting as presented. He then asked for a motion to approve the minutes. Keith Baldwin made a motion to approve the minutes. Sharlyn Rayment seconded the motion, and it carried unanimously.
III. OLD BUSINESS:
None
IV. ADMINISTRATIVE REPORT:
A. Q3 2011 Service Review: Brian Merrick, Justin Naegle and Carol Cann, via phone, with ING presented the service review. Cann discussed the executive summary noting the assets in the Plan are just over a billion dollars. The LifePath® option represents 26 percent and the Stable Value 18 percent of the Plan assets. The new self directed brokerage option (SDBO) has 10 participants with assets of $510,000. The loan fund equals $7.47 million, representing less than 1 percent of the total Plan assets. There have been 1,654 loans issued since the program was added in July of 2007; the average loan balance is $6,040 and 5 percent of participants have a loan.
Oregon Savings Growth Plan Page 2 Advisory Committee Meeting Minutes November 3, 2011
The net cash flow is a positive $782,476, contributions totaled $17,044,047 and distributions totaled $14,944,386.
Cann reported the average monthly contribution increased from $397 to $404 since September 2011. The average participant balance increased from $46,584 to $46,975 since September 2010. The Stable Value Option had the largest positive transfer activity, with approximately $9 million net transferred in the third quarter of 2011. The Small/Midsize Option had the largest transfer out activity of $410.4 million. Cann explained the rollovers out have decreased consistently since May 2011. Cann noted one of the upcoming Plan enhancements for 2012 is the Roth 457 which should be implemented in the third quarter. Merrick commented that some of the rollover activity out may have slowed down due to the transition counseling program now being used. Merrick will provide a summary slide in the next review. Mike Viteri asked if we had done any reaching out to participants who are nearing retirement. Bath would like a mailing/email or some kind of communication to participants close to retirement age reminding them when they retire they are not required to take their money out. Merrick said they would prepare a summary response on what the team can do to help educate and keep participants in the plan. Justin Naegle explained in the last quarter he has had 49 educational group meetings with an attendance of 763 participants. Naegle has been focusing on meeting with the human resource managers at his presentations to offer one-on-one counseling for the participants who prefer to meet individually. Some participants are more comfortable meeting one-on-one to enroll or talk about rolling money into the plan; Naegle had 257 one-on-one consultations with plan participants. He will continue to educate the participants on financial security, and he shared that participants like the Plan’s new branding and logo. Carol Cann gave a communication update noting the most recent accomplishments; which included the self-directed brokerage option, asset retention and National Save for Retirement Week. The upcoming initiatives for 2012 are to identify targeted audiences and to integrate technology with quick response codes and e-book (Enrollment Guide and Investment Option Guide). Merrick covered the enhancements that we will be seeing in December and January. The new Account Summary page with Dashboard will show more details about the
Oregon Savings Growth Plan Page 3 Advisory Committee Meeting Minutes November 3, 2011
participants account right on the first page. They will also be able to make changes to their account from this page. ING will be adding new mail delivery preferences so the participant can be notified of updates and changes to their accounts via e-mail or mobile phone. Merrick will be working with Gay Lynn on all of the new enhancements.
B. Q3 2011 Performance report/Presentation: Mike Viteri, from Treasury, and Jake O’Shaughnessy discussed the performance for Q3. Viteri highlighted the recent changes to the OSGP line-up; the Small Mid Cap added Callan Diversified Small Cap Trust to the Small/Mid-Size Cap. Within the International Option they added about 15 percent exposure to a DFA emerging markets fund. The T Rowe Price fund fee dropped 7 or 8 basis points, and by going from a mutual fund with MFS to a CIT (Co-Mingled Investment Trust), the fee dropped from 80 to 44 basis points. Viteri will continue to pursue the best performing managers/line-up changes.
Jake O’Shaughnessy started by reviewing the market in Q3. The 457 contribution limits have increased from $16,500 to $17,000 for 2012, which means the 3-year catch-up is now $34,000. O’Shaughnessy explained the third quarter was very interesting; it started out by the United States being downgraded by one of the three rating agencies. Most debt covenants read that you have to be downgraded by at least two of the three companies before it would have any material impact. Government debt was the best performing type of asset on the market. O’Shaughnessy commented on the volatility in the market due to the European market. The Feds have announced they are bringing down the long-term interest rates, selling Short Term Bonds and buying Long Term Bonds. The government recently announced some programs to refinance mortgages and student loans which would help free-up some of the debt Americans are currently under.
C. Update on Open House, Financial Advice Survey: Gay Lynn Bath gave an update on the open house and workshops held during National Save for Retirement Week which was October 17 through 21. There were workshops held every day at lunch time during the week which were well attended with 25-30 people in each one. On the day of the open house, between 80 and100 people that attended. There were also workshops held throughout the day, but the attendance was low for those. Bath invited representatives from BlackRock, Dwight and Charles Schwab to attend. The plan update and the state pay stub was used to communicate to state employees about
Oregon Savings Growth Plan Page 4 Advisory Committee Meeting Minutes November 3, 2011
the event, Bath suggested that next year OSGP could look into holding more that one open house, possibly in another city so more people can attend.
Bath noted there have been about 65 responses to her survey about Financial Engines. The majority said they would like to receive the annual statement at $6 a year, and in a follow up question, 46 respondents said they may be willing to pay the fee, 13 said they would be, and the rest were unsure or felt they could handle their investments on their own. Bath received an e-mail from Vice Chair Lattimer saying they already had financial advice in their other plan, and that employees most likely would not want to pay the fee. Bath talked about the possibility of allowing local governments to opt out. State Q3 2011 Status: Karen Blanton gave the third quarter status. Blanton was asked by Shukla what the percentage of participants was that attend the workshops who actually sign up. Karen indicated that 67 percent usually enroll. Blanton attended a regional managers meeting for the Oregon Educational Division this year. There were 105 managers from all over the state. It was a great opportunity to reach out to employees. Blanton held the wealth builder workshop for them. She explained that health insurance had taken precedence with people this year and the PEBB meetings sometimes conflicted with the benefit fairs, which resulted in less attending at the workshops. Blanton thanked Priyanka for helping her schedule six employee workshops at Revenue. Blanton has a regional managers’ meeting set up for next year in eastern Oregon at Fish and Wildlife where 50 to 60 managers should be in attendance. Blanton is working on a retirement workshop for Department of Human Services (DHS). She held two already and had good feedback. Karen said that the biggest misunderstanding when participants retire is they don’t realize they can leave their money in OSGP. She always emphasizes this when she meets with employees nearing retirement. Blanton explained the LifePath® funds are very popular for the novice investor. Blanton and Naegle will be holding workshops at OSU next week. Local Government Q3 2011 Status: Justin Naegle gave the third quarter update for Jack Schafroth today as he was attending a benefits fair in Grants Pass. The total current participation is up to 7 percent. Naegle explained the local governments have other providers available to them which make it more competitive. There were six new adoptions this last quarter; and four of those were school districts. There are six more adoptions in progress.
Oregon Savings Growth Plan Page 5 Advisory Committee Meeting Minutes November 3, 2011
Justin and Jack are working on increasing participation. Naegle noted that OSGP’s fees are a great selling point. Rollovers-in are at 89 percent of goal. Naegle said we need to target current local governments by holding more presentations. He and Schafroth are working on splitting up their territories to target more people.
D. Q2 2011 Plan Statistics: Kathy Gannon gave the highlights of the third quarter’s
statistics. There was a slowing down of total contributions this last quarter, possibly due to the current economic situation, but overall the contributions are up from last year. New enrollments were 298 for the quarter which is up from last year’s 291. The final paycheck provision is up 69 percent from last year at this time, Gannon contributes this to the payroll departments who are spreading the word about this provision. Loans are holding steady at around 35 per month. Unforeseeable emergencies have been increasing. Rollovers into the plan are at 244, which is up from last year’s 174; 126 were from the IAP. The rollovers out were 131; up from 128 last year at this time. Gannon added the prior service time purchase of service statistic which went into effect on September 1. There were 26 direct rollovers out to purchase time. For information on the eligible purchases, participants should contact PERS.
NEW BUSINESS
Chair Farrelly has been working on a sample survey for auto-enrollment. He has already held a test run in his building and got mildly promising responses. He will be working with Gay Lynn and will keep us up to date.
V. AUDIENCE PARTICIPATION: None
VI. ADJOURNMENT: The next meeting is February 8, 2012 in Salem.
There being no further business, Chair Farrelly adjourned the meeting.
Respectfully submitted,
Denise A Helms Assistant to the Deferred Compensation Manager
1
Fourth Quarter 2011Service Review
Presented by:
Michael DotoBrian MerrickJustin Naegle
Jay YoungSalem, OR
February 8, 2012
2
Agenda
• Investment Trends
• Local Office Update
• Executive Summary
• Transition Counseling Update
• Communications Update
• Industry Update
• Appendix A: ING Advisor Service
• Appendix B: Service Review– Participation Analysis– Asset Analysis– Participant Services
Presented by: Jay YoungInvestment Services
Investment Trends
4
Investment Trends
• Inflation Protection– Trend began as TIPS
– Has expanded to Real Return/Asset Funds
• Completion Funds– One Fund to combine asset classes that wouldn’t be used as
stand alone options
• Use of Non-lending Index Products
• Expansion of Fixed Income Options
• Global Exposure (Fixed Income and Equity)
• Demand for Guaranteed Income Products
5
Wrap providers exiting business,
More conservative Investment Guidelines
CITs closing to new inflows or
liquidating
Wrap providers raising fees or
tightening requirements
Investment Trends Stable Value
6
Investment Trends
Tiered Investment Approach
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
Advice
Target Retirement Date Funds
Passive Funds
Active Funds
Brokerage Window
Local Office Update
8
On-site Education & Support
• Meetings Held
– 55 educational group meetings with an attendance of 701 participants
– 292 one-on-one consultations with plan participants
– Local Office exceeded goal of 168 Group Meeting Goal for the Plan Year
• Introduced Online Recordings
– Through pWeb access to online recordings of popular seminars
– “Investing In Turbulent Times” is the first to be recorded
– 17% of OSGP members indicate that Web seminars are the preferredway to receive educational information
October 1, 2011 – December 30, 2011
9
1. How did you find out about the seminar?
2. If you took any action in your account as a result of education in the seminar, what was it?
3. If not currently participating in OSGP, will you begin saving in OSGP after attending the seminar?
On-site Education & Support
Human Resources/Employer 25%Mailing 3%E-mail 60%Poster/Flyer at Worksite 8%Co-worker 6%Other (website, etc.) 14%
Increased contributions 23%Reviewed my investments 22%No action taken 45%Other, please specify 22%
Yes 68%No 32%
4. What is your age range?
5. What is your preferred way to receive education?
Age Range PercentageLess than 30 3%30 to 40 18%41 to 50 26%51 to 60 39%61 to 70 12%71 to 80 2%More than 80 0%
On-site seminars 71%Individual consultations 11%Mailings 2%Web seminars/recordings 17%
Executive Summary
11
Executive Summary
Assets and Plan Composition• $1.169 billion as of December 30, 2011• Plan composition:
– LifePath Option represents 25% of Plan assets– Stable Value Option represents 17% of Plan assets– Self Directed Brokerage Option has increased to 7% of Plan assets– The loan fund equals $7.27 million, representing less than 1% of the total
Plan assets• 1,237 loans have been issued since the loan program was added in
July 2007• 5% of participants with a balance have a loan
Cash Flow• The net cash flow is a positive $1,402,956• Increase from positive $782,476 in Q3 2011, and negative $9.3 million
in Q2 2011
12
Executive Summary
Plan Observations
• The average monthly contribution is $488 with Higher Education at the top with an average deferral of $790 for the month of December 2011
• The average participant balance increased from $46,975 to $50,238 during the fourth quarter 2011
• The Intermediate Bond Option had the largest positive transfer activity. Approximately $10.3 million net transferred in the fourth quarter of 2011.
• The Life Path Option had the largest transfer out activity of ($10.1) million
13
Executive Summary
Plan Enhancements January 2012• Multifactor Authentication• Mobile App:• iPhone®, iPod touch®, and
Android™ devices• View their account balance,
personal rate of return, and conduct transactions– Changing their contribution rate– Transferring money among
investment options
pWeb carousel message
Whether you’re on the go a little or a lot, with ING’s mobile account app literally at your fingertips, you can view and manage your retirement plan account whenever and wherever you want.
14
Executive Summary
• Addition of Roth 457
• Addition of the Life Path 2055 Fund
• Sponsor Connect New Dashboards
• Plan Investment Chart
Upcoming Plan Enhancements 2012
15
Plan Profile 4Q 2011 and Rolling Quarters
Ass
ets
1Q 2011 2Q 2011 3Q 2011 4Q 2011 YTD
Beginning Balance $1,145,486,260 $1,196,560,633 $1,204,292,586 $1,091,615,358 $1,145,486,260
Net Cash Flow $7,205,161 $3,664,793 $8,576,808 $8,321,025 $27,767,787
Investment Earnings $43,869,212 $4,067,159 $(121,254,036) $69,425,374 $(3,892,291)
Ending Balance $1,196,560,633 $1,204,292,586 $1,091,615,358 $1,169,361,756 $1,169,361,756
Transition Counseling Update
17
Results of OSGP Transition Counseling Calls YTD
** The “Other” category represents assets which includes: not interested in TC service, still in active conversation, service related calls/still employed
Decision – 2011 # Calls % of Total Participants Assets % of Total
Assets
Remained in the Plan 67 77.01% $8,909,000 86.18%
Selected Alternate Carrier IRA 8 9.19% $833,918 8.07%
Selected ING IRA 1 1.15% $247,669 2.40%
Cash Distribution 11 12.64% $347,268 3.36%
Total 87 $10,337,855
Other** 129 $12,526,533
Initial results are encouraging in terms of outcomes, but have had a limited impact on the overall risk (under 3% of separated participants and assets have completed a full
discussion and come to decision with the help of a Retirement Consultant).
18
Using Transition Counseling for Optimum Benefit
Implementation of additional direct and email messages• “See It Thru” campaign
– Focus on both “Ready to Retire” and “Stay on Track” retirement modules
• Introduction of term confirmation packages/letters– Focus on distribution options and contact to ING to identify most appropriate option for
the participant– Currently using severance postcard with Transition Counseling callout box for newly
separated participants
Proactive Outreach• Introduction of TC Services through Direct mail program• Discussion of distribution options and help with the retirement
planning/retirement income planning process– Ongoing outreach efforts to newly separated participants– One-time outreach effort to all separated participants– Annual outreach program to all separated participants with a “retirement check-up” message
Communications Update
20
Communications and Education 2011
Accomplishments• Redesign Plan materials and forms• Launched Transition Counseling• Launched Self-Directed Brokerage Account• Participant Microsite and
Website enhancements• National Save for Retirement• Financial literacy and workshops
Industry UpdateIndustry Update
22
• Professional investment help is on the rise in 401(k) plans– Over half of 401(k) plans (59.4 percent) offered investment advice in 20101
– 75% of ING Institutional Plan Service clients offer the ING Advisor Service• Why has providing help become the standard?
– Plan sponsors want to manage fiduciary risk– And they’re concerned about participants retiring with sufficient assets
• Recent research – participants using “Help” are better off2– Those who had Help performed better 88% of the time vs. those who didn’t – 1.86% higher annual median returns on average (net of fees)– Different participants use different types of Help
1Plan Sponsor Council of America survey , 2010. 2Hewitt Associates and Financial Engines joint research, Help in Defined Contribution Plans: Is It Working and for Whom?, January 2010. See full disclosures of Hewitt Associates and Financial Engines joint research at the end of the presentation for more information.
Providing Help is Now the Standardand it’s Paying Off
23
Plan Participants’ Opinions
• Key Oregon Savings Growth Plan Financial Advice Survey Findings*– 90% of survey respondents said they would like an annual evaluation and Online
Advice because they want and expert opinion– 60% of survey respondents said they would be willing to pay for these services– Over half (54%) said they would consider a professional management service
where a team of investment advisors manage their account for an additional fee
Notable quotes“I think OSGP should offer members an optional service to purchase financial advice at a reasonable fee.”
“I am a fairly savvy amateur investor and don’t want to pay additional fees for additional management help.”
“Some people might want to have help using financial advisors in their investments, so having the option for those people is a good option. I don’t support making this a mandatory requirement for all of us.”
“The additional services the OSGP to enhance participants’ ability to make good investment decisions is very desirable and appreciated. Thank you, OSGP managers.”
Notable quotes“I think OSGP should offer members an optional service to purchase financial advice at a reasonable fee.”
“I am a fairly savvy amateur investor and don’t want to pay additional fees for additional management help.”
“Some people might want to have help using financial advisors in their investments, so having the option for those people is a good option. I don’t support making this a mandatory requirement for all of us.”
“The additional services the OSGP to enhance participants’ ability to make good investment decisions is very desirable and appreciated. Thank you, OSGP managers.”
* View complete report online at: http://www.oregon.gov/PERS/OSGP/docs/survey_summary_financial_advice.pdf
24
Advantages for Plan Sponsors
• Integration – Advisor Service is fully integrated with and connected to all of the services ING delivers to plan participants – Web – via ING Participant Website– Advisor Center – via Plan Information line– Print – ING Communications Manager
• Project Management– Familiarity with plan– Existing connectivity / technology– Rollout Preparedness
• Sound Methodology – Financial Engines, a widely recognized independent financial expert, is the provider of the online advice tools and methodology
• Ongoing Plan Changes/Service Updates – as the plan’s recordkeeper, ING provides information about plan changes as well as ongoing training about those changes to associates
• Manages Fiduciary Risk – Personal Evaluation Statements alert participants to potential areas of improvement with respect to their savings and investments
Solving Key Issues
Appendix A: ING Advisor Service
26
The ING Advisor Service
SavingsHelp participants save adequately for retirement.
InvestingProperly diversify and manage risk-appropriate portfolios.
Retirement IncomeIdentify their retirement Income needs and set goals.
It’s more than asset allocation. It’s a personalRetirement Plan to stay on track for life.
It’s more than asset allocation. It’s a personalRetirement Plan to stay on track for life.
27
Managed AccountWe do the work
ING Advisor Service – How it works
*May exclude “insiders” under applicable regulations and non-U.S. participants.
AdviceYou do the work
Retirement Evaluation
For everyone*
28
Everybody Deserves HelpIt Starts With Knowing Where You Stand
• We provide a Retirement Evaluation to all of your participants*– Annual campaign– It’s a wake-up call– It’s an investments, savings and
retirement income evaluation– It’s personalized– Can incorporate pension– It’s the first step to getting on track
*May exclude “insiders” under applicable regulations and non-U.S. participants.
29
Advice – The Participant Does the Work
• Advice delivered online or one to one over the phone• Designed for participants that choose to manage their own retirement
Online service provides:• A personalized Retirement Plan,
complete with an investments, savings and retirement income plan
• Easy to use forecasting tools to help prepare for your future
• Expert recommendations to help reach your goals
• Retirement Updates to keep you informed
• Call center support if participants have questions
Online service provides:• A personalized Retirement Plan,
complete with an investments, savings and retirement income plan
• Easy to use forecasting tools to help prepare for your future
• Expert recommendations to help reach your goals
• Retirement Updates to keep you informed
• Call center support if participants have questions
30
• Get a Retirement Plan
• An optimized portfolio
• Ongoing management & quarterly updates
• Get portfolio payout-ready
• Receive steady payouts
• Ongoing Checkups
• Receive Retirement Checkups
• Help complete the plan
• Stay on track toward goal
Professional ManagementAdvisors are there to help every step of the way
Planning for retirement Getting ready for retirement Retirement and beyond
Professional ManagementWe Do the Work
31
Every member receives:• A personalized Retirement Plan, for investments,
savings and retirement income plan• The ability to talk to an investment advisor• Online Member Site accessWe help optimize their plan:• Manage and monitor the retirement account• Consider additional savings, accounts and
income sources• Keep participants informed with Retirement UpdatesAnd:• There’s no minimum balance required• Members can cancel anytime
Retirement Plan & Ongoing Management
32
Quarterly Updates to Stay on Track
Retirement Updates to stay informed and on track:•Tracks progress toward goal•Summarizes account activity•Shows current fund allocations•Discloses portfolio risk•Provides market summary
33
Income+: Retirement Income Feature
*Account balance minimums may apply.**Requires purchase of an out-of-plan annuity. Issuer minimum purchase requirements may apply.
• Feature of Professional Management– No additional fee for participants or sponsors– Uses plan’s existing investment options—no in-plan
annuity required
• Helps prepare for retirement payouts– Checkup with an advisor to develop an income plan– Gets portfolio “payout-ready” via higher fixed income allocation– Maintains equity exposure for growth– Promotes plan retention
• Generates retirement payouts directly from a 401(k) account*– Steady with limited downside– Last for life**– Can go up with the market– Flexible
34
Plan Sponsor Monthly Activity Report
• Documents how plan participants engage with the ING Advisor Service
• Details utilization and includes:
– Monthly Investment Advisor Call Center activity
– Monthly Online Activity detailing use of the Personal Online Advisor service
– Monthly Professional Account Manager Program activity
35
Plan Sponsor Semi-annual Reach & Impact Report
• Facilitates sponsor monitoring obligations under ERISA
• Reach & Impact report– Utilization of services– Demographics– Participant impact– Portfolio analysis & methodology
• Investment performance– Risk & returns analysis– Historical performance
36
What Are the Fees?
Platform Fee: $6.00($0.50 per month charged to participant accounts)
• Annual Retirement Evaluation• Unlimited Use of Personal
Online Advisor• Access to ING Investment
Advisor Representatives
* Members’ accounts are charged monthly in arrears based on their account balance.
Implementation Project Fee: TBDPending confirmation of other retirement plans or pension integration.
Participant Fees*Assets Professionally Managed
Active Choice
First $100,000 0.60%
Next $150,000 0.40%
Additional Assets 0.30%
37
From “More Choice” to “More Help”
• Most plans today at ING and in the defined contribution industryoverall are offering advisory services to plan participants
• Participants express a desire for retirement planning
• Plan Sponsors help participants who need it– Guidance and advice available for all plan participants– Responsive to reluctant investors– Participants who need advice get advice
• Working with ING provides extensive fiduciary protections– U.S. Department of Labor supports investment advice– Professional Management service offers ERISA protections1
– QDIA Safe Harbor protection2, including company stock3
– Addresses concentrated portfolios and low savings rates– Fiduciary due diligence process supports sponsor monitoring
• Participant fee for optional Professionally Managed Account is reasonable
1,2,3 See footnotes and additional information at the end of this presentation.
Appendix B: Service Review
Service ReviewParticipation Analysis
40
Participant Status Summary
Participant Status Number of Participants
Active, Contributing 13,423
Active, Not Contributing 4,523
Suspended 101
Terminated, Receiving Installments 962
Terminated with a Balance 4,214
Total: 23,223
As of September 30, 2011
Participant Status Number of Participants
Active, Contributing 13,689
Active, Not Contributing 4,379
Suspended 109
Terminated, Receiving Installments 984
Terminated with a Balance 4,294
Total: 23,276
As of December 31, 2011
41
Average Monthly Contribution by Age
As of September 30, 2011 As of December 30, 2011
Age Group Before-tax Average $
<21 0.00
21-30 87.56
31-40 133.13
41-50 200.02
51-60 336.40
61 + 416.22
Age Group Before-tax Average $
<21 0.00
21-30 86.79
31-40 128.62
41-50 192.61
51-60 331.78
61 + 423.43
42
Average Contribution Amount by LocationAs of December 30, 2011
Def
erra
l Am
ount
43
95%
5%
Eligible Participating
Higher EdMisc. Agencies Local Gov’t
OSPSPlan
Plan ParticipationDecember 30, 2011
64%
36%
82%
18%
44
Participants with Balances by Number of Investments
As of December 30, 2011
45
Participants with Balances/Single Investmentp
a r t
i c
i p a
t i o
n
a n
a l y
s i
s
As of December 30, 2011
46
Age-based ParticipationAs of December 30, 2011
11,118 472 241 2,138 13,969
Service ReviewAsset Analysis
48
Plan Profile By Month for 4Q 2011 and Rolling Quarters
4Q 2011
Last 4 Quarters
Ass
ets
Ass
ets
49
Assets by Fund Objectives As of December 30, 2011
Total Plan Assets as of 12/30/11: $1,169,361,756
4.7%
16.8%
8.8%
7.4%
9.1%
7.7%7.0%
13.0%
25.4%Short Term Fixed Option
Stable Value Option
Intermediate Fixed Income Option
Large Cap Value Equity Option
Total Market Equity Index Option
Large Cap Growth Equity Option
International Equity Option
Small/Mid Cap Equity Option
BlackRock LifePath Funds
SMA
Up from 15.1% in 6 months
Up from 7.4% in 6 months
50
09/30/2011 12/30/2011
Assets by Funds September 30, 2011 – December 30, 2011
51
Balances by InvestmentAs of December 30, 2011
InvestmentInvestment
BalanceNumber of
ParticipantsAverage Participant
BalancePercentage
of Plan AssetsSHORT TERM FIXED OPTION $54,905,996.02 4,115 $13,342.89 4.72%STABLE VALUE OPTION $195,086,223.06 8,182 $23,843.34 16.79%LIFEPATH RETIREMENT FUND $87,779,494.81 2,426 $36,182.81 7.55%LIFEPATH 2015 FUND $77,499,077.80 2,607 $29,727.30 6.67%LIFEPATH 2020 FUND $56,567,062.07 2,739 $20,652.45 4.87%LIFEPATH 2025 FUND $28,248,464.54 2,110 $13,387.90 2.43%LIFEPATH 2030 FUND $18,618,676.63 1,805 $10,315.06 1.60%LIFEPATH 2035 FUND $12,200,054.90 1,547 $7,886.27 1.05%LIFEPATH 2040 FUND $6,146,248.95 1,177 $5,221.96 0.53%LIFEPATH 2045 FUND $2,668,490.07 585 $4,561.52 0.23%LIFEPATH 2050 FUND $5,700,018.42 706 $8,073.68 0.49%
INTERMEDIATE BOND OPTION $102,308,651.40 7,404 $13,818.02 8.80%LARGE COMP VALUE STOCK OPTION $85,697,147.22 9,462 $9,056.98 7.37%STOCK INDEX OPTION $105,826,414.67 8,803 $12,021.63 9.11%LARGE COMP GROWTH STOCK OPTION $88,923,455.86 9,883 $8,997.62 7.65%INTERNATIONAL STK OPTION $81,198,960.82 10,491 $7,739.87 6.99%SM/MID SIZE CO STK OPTION $151,170,431.53 11,589 $13,044.30 13.01%SCHWAB PCRA $1,493,805.99 28 $53,350.21 0.13%
52
Balances by Participant StatusAs of December 30, 2011
a s
s e
t a
n a
l y
s i s
As of September 30, 2011 As of December 30, 2011
Participant Status Participant Balance
Active, Contributing $571,357,542
Active, Not Contributing $170,711,048
Suspended $2,434,203
Terminated, Receiving Installments $65,872,849
Terminated with a Balance $281,200,556
Total: $1,091,576,198
Participant Status Participant Balance
Active, Contributing $621,082,274
Active, Not Contributing $168,996,100
Suspended $3,213,383
Terminated, Receiving Installments $71,403,613
Terminated with a Balance $304,666,386
Total: $1,169,361,756
53
Participant Transfer Analysis Q4 2011
54
Transfer Activity by InvestmentQ4 2011
Investment Name Transfers In Transfers Out Net
SHORT TERM FIXED OPTION $3,496,311.80 -$4,286,704.97 -$790,393.17
STABLE VALUE OPTION $9,629,526.92 -$4,204,032.32 $5,425,494.60
LIFEPATH RETIREMENT FUND $3,552,255.02 -$3,184,050.46 $368,204.56
LIFEPATH 2015 FUND $2,714,237.77 -$1,890,919.04 $823,318.73
LIFEPATH 2020 FUND $1,036,941.57 -$2,421,842.55 -$1,384,900.98
LIFEPATH 2025 FUND $198,454.36 -$1,383,225.54 -$1,184,771.18
LIFEPATH 2030 FUND $254,849.34 -$361,316.35 -$106,467.01
LIFEPATH 2035 FUND $110,829.01 -$273,546.29 -$162,717.28
LIFEPATH 2040 FUND $243,108.76 -$276,610.29 -$33,501.53
LIFEPATH 2045 FUND $50,758.31 -$18,163.42 $32,594.89
LIFEPATH 2050 FUND $117,972.44 -$371,729.71 -$253,757.27
INTERMEDIATE BOND OPTION $10,341,669.49 -$3,505,838.78 $6,835,830.71
LARGE COMP VALUE STOCK OPTION $1,751,390.00 -$2,975,040.64 -$1,223,650.64
STOCK INDEX OPTION $1,781,922.60 -$3,159,835.86 -$1,377,913.26
LARGE COMP GROWTH STOCK OPTION $2,051,262.09 -$2,819,364.93 -$768,102.84
INTERNATIONAL STK OPTION $802,080.07 -$3,837,666.34 -$3,035,586.27
SM/MID SIZE CO STK OPTION $3,242,334.47 -$7,213,303.65 -$3,970,969.18
SCHWAB PCRA $1,111,429.34 -$101,352.63 $1,010,076.71
55
Rollovers in: $6.60M Rollovers in: 208Net rollovers: -$.02MRollovers out: -$6.80MRollovers out: 118
Top 4 Receiving Institutions:Edward Jones 11%Vanguard 8%Pershing 8% Fidelity 4%
Rollovers (Includes Local Governments)January 2011 – December 2011
56
Loan Issuances 1Q 2011 through 4Q 2011
Rolling Quarters
Num
ber o
f Lo
ans
Issu
ed
Num
ber o
f Lo
ans
Issu
ed
57
Cash Flow SummaryOctober 1, 2011 – December 30, 2011
Cash In
Pre-tax Contributions $17,090,916
Plan Transfers/Rollover Ins 6,807,447
Loan Repayments 836,912
QDROs/Death Transfers 1,447,324
Total Cash In $26,182,599
Cash Out
Withdrawals $2,218,580
Distributions 13,552,723
Plan Transfers/Rollovers Out 6,931,646
Loans Issued 623,220
Fees 6,150
QDROs/Death Transfers 1,447,324
Total Cash Out ($24,779,643)
Net Cash Flow $1,402,956
Service ReviewParticipant Services
59
Participant Contact Summary
October 1, 2011 – December 30, 2011
60
Paperless Transaction Summary
October 1, 2011 – December 30, 2011
61
Interactive Voice Response (IVR) Activity
Date Total IVR CallsIVR Calls During
CSA HoursIVR Calls Outside
of CSA HoursIVR Calls
Transferred to CSA Percent of IVR Calls Transferred to CSA
Oct - 2011 4,489 2,831 1,658 1,330 46.98
Nov - 2011 3,581 2,414 1,167 1,148 47.56
Dec - 2011 4,268 2,808 1,460 1,357 48.33
October 1, 2011 – December 30, 2011
62
Customer Service Associate (CSA) Activity
Reporting Period CSA Call VolumeAverage Speed of
Answer (Seconds)Average Call
Length (Minutes)
Oct - 2011 1,240 98 4.48
Nov - 2011 1,101 50 4.52
Dec - 2011 1,294 54 4.32
October 1, 2011 – December 30, 2011
63
Customer Service Associate (CSA) Activity
January 1, 2011 – December 30, 2011
Reporting Period PSR Call Volumes Number of Abandoned Calls Percent of Abandoned Calls
Jan-2011 1,026 34 3.21%
Feb-2011 865 36 3.99%
Mar-2011 794 25 3.04%
Apr-2011 922 41 4.23%
May-2011 723 11 1.50%
Jun-2011 619 11 1.75%
Jul-2011 785 27 3.33%
Aug-2011 1,066 49 4.38%
Sep-2011 839 9 1.06%
Oct-2011 1,240 86 6.47%
Nov-2011 1,101 45 3.92%
Dec-2011 1,294 58 4.27%
64
October 1, 2011 – December 30, 2011
Internet Visits by Month
65
October 1, 2011 – December 30, 2011
Paperless Transactions by Channel
66
Paperless Transaction Summary (IVR/CSA/Web Combined)
Transaction Description Transaction Volume
Contribution Rate Change 861
Document/Package Requests 182
Fund to Fund Transfers 1,650
Investment Election Changes 827
Investment Rebalance Elections 97
New Loans Issued 82
Total Paperless Transactions 3,699
October 1, 2011 – December 30, 2011
67
Transaction Description Transaction Volume
Contributions 47,252
Rebalance Transfers 293
Fee Deduction 91
Installment Distributions 2,509
Required Minimum Distributions 292
Total: 50,437
Processing Summary
October 1, 2011 – December 30, 2011
68
Thank you!
Financial Advice Survey Summary In these trying economic times, Oregon Savings Growth Plan (OSGP) wants to be sure that our participants have all the tools necessary to help them prepare for a secure financial future. We have seen many participants leave the plan when they retire because we did not offer financial advice. Therefore, OSGP is considering adding financial advice from ING through its partnership with Financial Engines. All participants would receive an annual Retirement Evaluation statement which provides a personalized summary of their portfolio and offers help with their investments, savings, and retirement income. The participants would then have access to Online Advice. Participants who manage their OSGP account on their own but are looking for advice from an expert may find this service helpful in reaching their goals. These accounts would be pre-populated with their OSGP account and investment information. Participants would be charged a monthly fee of 50 cents (annual fee of $6) for the printed Retirement Evaluation statement and 24/7 access to Online Advice. Participants who want an independent advisor to manage their OSGP account for them could enroll into the professional management program, speak to an advisor about their retirement goals, and receive quarterly
progress reports about their portfolios. This service is offered for an additional fee. OSGP held webcasts with two focus groups to review the services. The focus groups were made up of current employees and retirees. OSGP also developed a survey that was posted on both the state and ING’s websites. The survey was open for several months, and notice was given in the quarterly newsletter. Only 127 participants responded. These were the results of that survey:
• 37.4 percent responded that the last time they made any changes to their OSGP account was more than a year ago.
• 58.9 percent said they planned to
retire within the next 15 years.
• 78 percent had created a plan to save and investment for retirement. Sixty-five percent said they had stuck to that plan.
• 60 percent felt that they had
enough time and expertise to research investments and plan for retirement.
• 60 percent said they would like
to receive an annual Retirement Evaluation statement and to have access to Online Advice for the fee of 50 cents per month.
• 90 percent said they would like
the evaluation and Online Advice because they wanted an expert opinion.
• For those who said they did not want the service, 45 percent said they were confident in their own investment, and 70 percent said they did not want to pay a fee. (Respondents could choose multiple responses.)
• 54 percent indicated they would
consider a professional management service in which a team of investment advisors would manage their account for them at an additional fee.
• Of those who said they might be
interested in a managed account, 68 percent said they would do so to avoid making a big mistake and losing their investments before they were able to retire. Forty-five percent said they wanted an independent advisor to do this for them so they didn’t have to, and another 40 percent said they wanted to have a plan for retirement (multiple responses).
• For those not interested in a
managed account, 55 percent said they didn’t think it was worth the cost, and 43 percent did not want to delegate this responsibility to a professional advisor.
Some of the comments from those who liked the idea were: “There is a significant benefit to working with a financial provider experienced with PERS pension fund and Oregon State investment laws. Providing financial services that meet these
requirements could be beneficial to our members.” “I don’t want to make a major mistake and with professional advice it may be avoided.” “I think OSGP should offer members an optional service to purchase financial advice at a reasonable fee. The fee of 50 cents per month mentioned in the survey is very reasonable and I would sign up immediately provided I felt the advisor actively monitored and managed my account with my retirement goals in mind.” “The additional services the OSGP to enhance participants’ ability to make good investment decisions is very desirable and appreciated. Thank you, OSGP managers.” “I think this is an important need for the broad population of people in the OSGP. I take more than the usual interest in investing, but I still have a lot to learn. I am nearing, but not yet at, retirement age. I will probably seek out independent advice soon on a fee-basis. But even if I do that, this service would be a chance for a double check on that advice, if it is what it can be. And for other investors, it might be all they will do. I’m appalled by the number of people who are talked into removing their money from this plan or from PERS after retirement, and who are all but being robbed of their own money through commissions and fees. They need an alternative and this could be hugely beneficial to them.”
Those not so keen on the idea had this to say: “Some people might want to have help using financial advisors in their investments, so having the option for those people is a good option. I don’t support making this a mandatory requirement for all of us.” “I am very satisfied with my current OSGP retirement withdrawals. I am a fairly savvy amateur investor and don’t want to pay additional fees for additional management help.” “Many of us will be very upset if this additional 6.00 financial fee is forced on us! If an individual wants additional advice, then that should be their choice. Also please remember there is a lot of anger & distrust towards financial institutions and big banks going on right now.” “Any additional costs should be OPTIONAL. In addition, I think there is a lot of advice that could and should be provided for free with regard to the value of diversification, etc. Finally, I think the retirement date based funds provide the support you are looking to provide for the investor who wants to stick to the tried and true.” Questions posed by respondents have been addressed below: How much does the Professional Account Manager program cost? It depends on your account balance. For accounts under $50,000, it would be 60 basis points*; for the next $50,000, 50 basis points, 40 basis points for the next $50,000 and 20 basis points for accounts over $150,000. *1/100 of 1%
Posting the dates for the 1st and 2nd quarter OSGP workshops planned for 2012 before the end of 2011 would be helpful. OSGP posts the upcoming workshops in November of each year. These can be found at: http://www.oregon.gov/PERS/OSGP/section/2012_osgp_workshop.shtml Will this be available to retirees also? Yes, all participants will be able to use this service. Is someone available online by chat? You would be able to call someone to talk about your account. This person can also help you with the on-line advice tool. If you sign up for the managed account, you would talk to a financial advisor on the phone. An example of the annual progress report that would go to all participants is attached.
1
ING Communications
week 1 week 4 – week 6
Introduction• Cover letter• Preview card
Preview and Transition:Welcome Kit• Cover letter• Plan Preview• Welcome Brochure• Legal Info
Evaluation• Cover letter• Retirement Evaluation• Information booklet• Reply form• Legal info
Ongoing Management(quarterly)• Cover letter• Progress Report
Deadline Reminder• Postcard• Email
deadline ongoing member communicationsweek 2
Follow Up• Reminder letter• Reply form
Awareness Education Action
Page 1 of 6
retirement update Prepared for Robert Harrison Account [Plan Name]
Period 4/7/10-7/7/11 Data as of 7/7/11
How is my account doing?Portfolio summary
Profile and preferences1
Call us to customize your prefere
Current age
Retirement age
Risk preference2
Your savings3
[Plan Sponsor] contribution
Social Security estimate4
Can you do better?
Even a little more saved big impact on your retireCall us to discuss ideas.
Call 1-800-
This period Since enrollment (4/7/10)
Managed account opening balance1 $72,850 $72,850
+ Change in value $1,256 $1,256
Managed account closing balance1 $74,106 $74,106
+ Other retirement assets2 $21,045 $21,045
Total portfolio closing balance $95,151 $95,151
Retirement income
Important information about this graph4. The potential one-year loss of your portfolio target is 9.3% or more2.
Based on your current balance of $95,151 and savings rate, your portfolio may be worth $372,0004 when you retire if market performance is average.
That balance, combined with Social Security 4 could provide a total retirement income4 of $42,800 per year in retirement.
Will you reach your goal?
Retirement goal: $42,000/yr4 Retirement forecast: $42,800/yr4
50 55 60 65Today Retirem
$500k
$400k
$300k
$200k
$100k
AGE
Currentportfolio value
$95,151
Forecaportfolio va
$372,00
$145,000
$234,000
likely
S A MP L E
This is a sample for informational purposes. It is subject to change and does not contain actual participant data.
nces
50
65
Typical for your age
6% or $2,970/yr
$2,970/yr
$18,200/yr
today could have a ment lifestyle later.
601-5957
ent
BELOW AVERAGE
AVERAGE
stlue
0ABOVE AVERAGE
||||||||||||||||||||| 0622
2011
Page 2 of 6
retirement update
0% Cash 29% Bonds 30% Large-cap stocks 20% Mid/small-cap stocks 21% International stocks 0% Individual equities
Portfolio overview and managed account
Total portfolio balance: $95,151(includes your other retirement assets2)
Current portfolio investment style
[Plan Name] balance: $74,106(as of 7/7/11)
We create a custom investment mix for your accounts. Our goal is to maximize your returns at a risk level that’s right for you2. If you want to lower or raise your risk preference, call us.
Investment Current Current Previous Investment style* value allocation allocation (Primary, secondary) (as of 4/7/11)
Money Market Cash -- -- 3%
Stable Value Fund Bonds, Cash $3,705 5% 13%
Bond Fund Bonds $2,964 4% --
Large Cap Fund Large-cap stocks $28,901 39% 37%
Small Cap Fund Mid/small-cap stocks $18,526 25% 32%
International Growth Fund International stocks $20,008 27% 15%
TOTAL $74,106 100% 100%
* Each investment may exhibit the characteristics of one or many styles. Here you see the predominant styles per investment.
Planned risk level2 Moderatately Aggressive
Risk preference2 Typical for your age
S A MP L E
Managed account growth
Since enrollment, your account has increased $1,256
Your managed account value changes due to contributions and withdrawals, as well as from investment gains and losses. It does not inlcude any restricted investments2.
Actual value of managed account
$80K
$70K
$60K7/114/11 10/11 4/12 7/121/12 10/12
$65K
$75K
$85K
1/13
Page 4 of 4
retirement update
Page 3 of 6
Date Actions taken
6/19/11 Reallocation transaction confirmed
6/16/11 Investments reviewed
5/18/11 Reallocation transaction confirmed
5/15/11 Investments reviewed
4/30/11 Retirement Plan mailed
Management activities
Below is a listing of activities we have completed in the past quarter to manage your account. If you have any questions about these activities, please call a Financial Engines Investment Advisor Representative at 1-800-601-5957.
Date Actions taken
4/26/11 You personalized your account
4/18/11 Reallocation transaction confirmed
4/15/11 Investments reviewed
4/11/11 Retirement Plan mailed
4/8/11 You personalized your account
||||||||||||||||||||| 0622
2011
Robert’s Traditional IRA balance: $21,045(as of 7/7/11)
Other retirement assets2
This is a list of other retirement assets you or [Plan Sponsor] have told us about2. We take these into account when creating the planned allocation for your managed account and estimating your total retirement income. However, we do not manage them. Please review the list and let us know of any changes that are not shown here. For example, you may have had deposits or withdrawals.
Current Current Investment Ticker Quantity Price value allocation
Intermediate Bond Fund IBFIX 893 $23.57 $21,045 100%
TOTAL $21,045 100%
Savings
Your savings for your [Plan Name]:You are taking full advantage of your [Plan Sponsor] contribution. However, you might consider additional pre-tax savings allowed by your plan. To increase your savings, call [Plan Provider Phone Number] or log in to your account at [Plan Provider URL].
Retirement accounts Current savings
[Plan Name] $2,970/yr
[Plan Sponsor] contribution to [Plan Name] $2,970/yr
Robert’s Traditional IRA Call us to provide information
TOTAL $5,940/yr
S A MP L E
TED WHEELER STATE TREASURER
PHONE 503-378-4329 FAX 503-373-7051
STATE OF OREGON
OREGON STATE TREASURY 159 STATE CAPITOL, 900 COURT ST NE
SALEM, OREGON 97301-4043 Date: January 27, 2012
To: Oregon Investment Council
From: Michael Viteri, Senior Public Equity Investment Officer
Re: 4th Quarter 2011 Reporting, Deferred Compensation Program BACKGROUND In U.S. Equities, the broad market Russell 3000 index (comprised of the Russell 1000 large cap and Russell 2000 small cap indices) bounced back from a negative 3rd quarter return of ‐15.28 percent, to post a return of 12.11 percent for the quarter ending December 30, 2011. In terms of style, value outperformed growth, and small‐cap stocks outperformed large caps during the quarter. The Russell Small Cap Value Index took a leadership position for the quarter, posting a return of 15.97 percent, while the Russell 1000 Growth index placed last, posting a return of 10.60 percent.
In terms of Russell 3000 sectors, all nine sectors finished the quarter in the black. Energy, Materials, and Producer Durables were the strongest performers during the quarter posting returns of 18.6 percent, 16.6 percent, and 16.3 percent, respectively. On a calendar year basis, Consumer Staples finished in first place posting a return of 14.2 percent, while Financials lagged the broader index by a wide margin during the year posting a return of ‐11.91 percent.
13.10%
11.87%
10.60%
13.37%
12.35%
11.24%
15.97%
15.52%
14.99%
0.45%
1.48%
2.48%
-1.49%
-1.74%
-2.03%
-6.16%
-4.82%
-3.71%
-2.64%
0.00%
2.50%
0.04%
1.46%
2.44%
-1.87%
0.22%
2.09%
-10% -5% 0% 5% 10% 15% 20%
Russell 1000 Value
Russell 1000
Russell 1000 Growth
Russell Midcap Value
Russell Midcap
Russell Midcap Growth
Russell 2000 Value
Russell 2000
Russell 2000 Growth
Q4-2011
1 year
3 years
Trailing returns for US Equityfor period ending December 30, 2011
Natural disasters, political turmoil and sovereign debt crises took a toll on Non‐US Equity Markets. International developed markets were able to eke out respectable returns for the quarter with the MSCI EAFE Index posting a 3.33 percent return. The debt crises in the Europe, which appeared to threaten the very existence of the Euro, was the catalyst for the negative calendar year return of‐12.14 percent.
The MSCI Emerging Markets Index rose by than 4.42 percent for the quarter. However, as a result of political instability in the Middle East and Africa, and economic slowdowns in China and Brazil, the calendar year return in US dollar terms was ‐18.42 percent.
In U.S. Fixed Income, equity volatility sent investors to safer havens such as cash and U.S. Treasuries. During the calendar year 2011 market demand for U.S. Sovereign debt drove the yields on the 10‐Year U.S. Treasury down by 148 basis points, benefiting those that held U.S. debt. The Barclays Long Treasury index posted returns of 1.86 percent for the quarter and an astounding 29.93 percent for the calendar year.
Performance
As of December 30, 2011
USD % Lcoal Currency %
INDEX Q4 2011 1 Year Q4 2011 1 Year
MSCI AC World ex U.S. 3.72% ‐13.71% 0.17% ‐12.16%
MSCI EAFE 3.33% ‐12.14% 0.53% ‐12.15%
MSCI Europe 5.39% ‐11.06% 0.98% ‐9.34%
MSCI Japan ‐3.86% ‐14.33% ‐0.07% ‐18.73%
MSCI Emerging Markets 4.42% ‐18.42% 4.84% ‐12.74%
Performance
As of December 30, 2011
INDEX Q4 2011 1 Year
Barclays U.S. Aggregate 1.12% 7.84%
Barclays Long Gov/Credit 2.57% 22.49%
Barclays Long Treasury 1.86% 29.93%
Barclays U.S. Credit 1.70% 8.35%
Barclays U.S. Corporate Hi Yield 6.46% 4.98%
US Yield Cure
12/30/2010 12/30/2011 Change
3 Month 0.108% 0.010% ‐0.098%
6 month 0.186% 0.056% ‐0.130%
1 year 0.267% 0.102% ‐0.165%
3 year 1.046% 0.354% ‐0.692%
5 year 2.062% 0.832% ‐1.230%
10 year 3.365% 1.876% ‐1.489%
30 year 4.423% 2.894% ‐1.529%
OSGP OPTIONS REVIEW
The Short‐Term Fixed Option posted a net of fees return of ‐0.04%, under‐performing the benchmark (91‐day Treasury bill) by 0.04%. The negative return in this option continues to be explained by two factors: 1) The Federal Reserve keeping the discount rate at exceptionally low levels (25 bps since December 15, 2008); 2) Recordkeeping and administrative fees of the OSGP of 10 bps and 8 bps, respectively. State Street Global Markets (SSgM) Government Short Term Investment Fund (GSTIF) is the sole provider within the Short‐Term Fixed Option and was selected as it was a conservative investment option, whose mandate is to invest in short term US Treasury instruments and to maintain an average maturity of the fund of less than 90 days. Given the expectation that the Fed will keep the discount rate a low levels (3 month Treasury yields averaging 10 bps over the year) for the foreseeable future, yields within the portfolio will continue to be low, causing the returns associated with this option to be negative due to recordkeeping and administrative fees.
The Stable Value Option posted a return of 0.37% out‐performing the 91‐day Treasury Bill by 0.37% but underperforming the Rolling Average 5‐Year Constant Maturing Treasury Yield by 0.27%.
The Intermediate‐Bond Option posted a return of 1.15%, outperforming the benchmark (Barclays Aggregate Index) for the quarter by 0.03%.
The Large Cap Value Equity Option posted a return of 12.71% for the quarter, under‐performing the Russell 1000 Value Index by 0.40%.
The Total Market Equity Index Option posted a return of 12.12%, in‐line with the index (Russell 3000 Index).
The Large Cap Growth Equity Option posted a return of 10.27% for the quarter, under‐performing the Russell 1000 Growth Index by 0.34%.
The International Stock Option posted a return of 4.92% for the quarter, outperforming the benchmark (MSCI EAFE Index) by 1.62%.
The Small/Mid Cap Equity Option posted a return of 14.28% for the quarter, under‐performing the benchmark (Russell 2500 Index) by 0.24%. The Blackrock LifePath Retirement Funds all performed in line with their respective Custom Indices and 8 of the 9 Funds outperformed their respective Peer Group for the quarter. The Charles Schwab Brokerage Window continues to garner assets. Total assets within the self‐directed brokerage option (SDBO) increased from $0.5 mm in Q3 2011, to $1.6 mm in in Q4 2011. Given that the average plan participation rate in SDBO ranges from 3 percent to 5 percent, we expect assets in this option to stabilize at about $40 mm. OSGP WATCHLIST Wells Capital’s U.S. large cap growth strategy tripped the performance shortfall trigger in July 2010 for underperforming in the three‐, four‐, and five‐year trailing periods. While staff has continued confidence in the strategy, the under‐performance compels Watchlist status, and is being monitored as part of the OPERF separately managed account.
OSGP INVESTMENT CONSULTANT REVIEW Following this memo, you will find the Q4 2011 quarterly performance review created by the Arnerich Massena (OSGP Investment Consultant).
Oregon Savings Growth PlanPerformance Results
as of October 31, 2011Updated on 11/4/2011
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option -0.01% -0.04% -0.09% 2.82% 1.79% -0.10% -0.10% -0.02% 1.51% 1.79%91-Day T-Bill 0.00% 0.03% 0.10% 3.08% 1.99% 0.13% 0.12% 0.18% 1.66% 1.99%Stable Value Option 0.13% 0.39% 1.33% 4.21% 3.52% 1.60% 1.75% 1.88% 2.92% 3.52%91-Day T-Bill 0.00% 0.03% 0.10% 3.08% 1.99% 0.13% 0.12% 0.18% 1.66% 1.99%Rolling Average 5 Year CMT** 0.22% 0.67% 2.42% 4.72% 4.05% 2.95% 3.22% 3.40% 3.59% 4.05%Intermediate-Bond Option 0.18% 1.65% 6.38% 5.97% 5.64% 5.02% 7.28% 11.14% 6.46% 5.64%BC Aggregate 0.11% 2.31% 6.76% 6.31% 5.46% 5.00% 6.50% 8.87% 6.41% 5.46%Large Company Value Stock Option 11.75% -4.17% -1.97% 5.81% 4.46% 4.62% 9.37% 9.16% -2.21% 4.46%Russell 1000 Value 11.45% -3.40% -1.08% 6.55% 4.57% 6.16% 10.83% 8.78% -2.05% 4.57%Stock Index Option 11.52% -3.34% 0.32% 5.78% 4.17% 7.74% 12.86% 12.15% 0.42% 4.17%Russell 3000 11.51% -3.31% 0.47% 6.03% 4.37% 7.90% 13.00% 12.28% 0.55% 4.37%Large Company Growth Stock Option 10.92% -3.22% 2.21% 4.31% 3.33% 8.74% 14.12% 14.88% 1.79% 3.33%Russell 1000 Growth 10.97% -2.63% 2.98% 4.84% 3.56% 9.92% 14.68% 15.62% 3.04% 3.56%International Stock Option 10.29% -11.53% -9.00% 5.45% 6.60% -6.30% 2.34% 10.50% -1.95% 6.60%MSCI EAFE 9.64% -9.76% -6.78% 3.98% 5.73% -4.08% 1.95% 9.90% -2.41% 5.73%Small/Mid-Size Company Stock Option 14.76% -5.40% -3.00% 9.43% 8.64% 7.88% 16.62% 16.88% 2.93% 8.64%Russell 2500 14.66% -6.10% -2.39% 8.26% 8.01% 7.97% 17.45% 16.03% 2.01% 8.01%LifePath® Retirement 4.18% -0.83% 3.57% 4.97% 8.51% 10.98%LifePath® 2015 5.13% -1.59% 2.71% 4.86% 9.07% 11.44%LifePath® 2020 6.15% -2.46% 1.60% 4.50% 9.25% 11.77%LifePath® 2025 7.10% -3.26% 0.75% 4.20% 9.51% 12.04%LifePath® 2030 7.87% -3.80% -0.04% 3.99% 9.69% 12.25%LifePath® 2035 8.45% -4.55% -0.85% 3.54% 9.78% 12.38%LifePath® 2040 9.39% -4.93% -1.38% 3.51% 9.95% 12.61%LifePath® 2045 9.74% -5.51% -2.03% 3.25% 9.99% 12.73%LifePath® 2050 10.33% -6.12% -2.56% 2.93% 10.14% 13.13%
**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considereda representation of performance of the options in the future. Investment returns and principal are not guaranteed.
Annualized
Monthly performance results are published on the PERS web page at www.pers.state.or.usTo access current account information 24 hours a day call our Customer Service Center at 1-800-365-8494.
Oregon Savings Growth PlanPerformance Results
as of November 30, 2011Updated on 12/6/2011
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option -0.01% -0.04% -0.11% 2.80% 1.78% -0.11% -0.10% -0.04% 1.42% 1.77%91-Day T-Bill 0.00% 0.00% 0.10% 3.07% 1.97% 0.12% 0.12% 0.15% 1.57% 1.97%Stable Value Option 0.12% 0.39% 1.45% 4.19% 3.51% 1.59% 1.73% 1.82% 2.87% 3.50%91-Day T-Bill 0.00% 0.00% 0.10% 3.07% 1.97% 0.12% 0.12% 0.15% 1.57% 1.97%Rolling Average 5 Year CMT** 0.21% 0.65% 2.63% 4.71% 4.04% 2.90% 3.18% 3.36% 3.57% 4.03%Intermediate-Bond Option -0.19% 0.37% 6.18% 5.93% 5.58% 5.35% 6.53% 10.70% 6.18% 5.70%BC Aggregate -0.09% 0.75% 6.67% 6.27% 5.40% 5.52% 5.77% 7.69% 6.14% 5.59%Large Company Value Stock Option -0.64% 1.97% -2.59% 5.73% 4.35% 4.79% 6.25% 11.70% -2.76% 3.77%Russell 1000 Value -0.52% 2.49% -1.59% 6.48% 4.48% 6.17% 7.55% 11.32% -2.59% 3.93%Stock Index Option -0.26% 2.56% 0.06% 5.73% 4.11% 6.88% 9.64% 15.18% -0.05% 3.37%Russell 3000 -0.27% 2.58% 0.20% 5.98% 4.31% 7.00% 9.77% 15.29% 0.06% 3.57%Large Company Growth Stock Option -0.16% 2.43% 2.05% 4.28% 3.29% 7.55% 10.58% 18.50% 1.38% 2.46%Russell 1000 Growth -0.01% 2.79% 2.97% 4.82% 3.52% 8.64% 11.31% 18.85% 2.64% 2.61%International Stock Option -2.65% -4.99% -11.41% 5.23% 6.26% -4.83% -0.80% 11.92% -3.11% 5.84%MSCI EAFE -4.85% -5.62% -11.30% 3.62% 5.16% -4.12% -1.54% 10.11% -3.95% 4.83%Small/Mid-Size Company Stock Option -0.51% 2.01% -3.49% 9.34% 8.51% 3.90% 14.18% 20.94% 2.22% 7.79%Russell 2500 -0.35% 1.92% -2.73% 8.19% 7.90% 4.65% 14.95% 20.42% 1.29% 7.13%LifePath® Retirement -0.36% 0.22% 3.20% 5.28% 6.94% 11.39%LifePath® 2015 -0.57% -0.04% 2.12% 5.10% 7.12% 12.41%LifePath® 2020 -0.78% -0.24% 0.81% 4.54% 7.08% 13.02%LifePath® 2025 -0.89% -0.54% -0.16% 4.25% 7.07% 13.57%LifePath® 2030 -1.12% -0.65% -1.16% 3.82% 7.10% 13.99%LifePath® 2035 -1.14% -0.87% -1.99% 3.48% 6.99% 14.42%LifePath® 2040 -1.38% -1.10% -2.74% 3.23% 6.98% 14.81%LifePath® 2045 -1.30% -1.12% -3.30% 3.07% 6.94% 15.16%LifePath® 2050 -1.42% -1.34% -3.94% 2.75% 7.00% 15.58%**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considered a representative of performance of the options in the future. Investment returns and principal are not guaranteed.
Annualized
Monthly performance results are published on the PERS web page at www.pers.state.or.usTo access current account information 24 hours a day call our Customer Service Center at 1-800-365-8494.
Oregon Savings Growth PlanPerformance Results
as of December 31, 2011Updated on 1/9/2012
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option -0.01% -0.04% -0.12% 2.78% 1.76% -0.12% -0.10% -0.06% 1.33% 1.75%91-Day T-Bill 0.00% 0.00% 0.10% 3.05% 1.96% 0.10% 0.11% 0.14% 1.48% 1.95%Stable Value Option 0.11% 0.37% 1.57% 4.18% 3.49% 1.57% 1.70% 1.76% 2.81% 3.47%91-Day T-Bill 0.00% 0.00% 0.10% 3.05% 1.96% 0.10% 0.11% 0.14% 1.48% 1.95%Rolling Average 5 Year CMT** 0.21% 0.64% 2.85% 4.70% 4.03% 2.85% 3.13% 3.33% 3.55% 4.00%Intermediate-Bond Option 1.16% 1.15% 7.42% 5.97% 5.65% 7.42% 7.70% 9.97% 6.55% 5.89%BC Aggregate 1.10% 1.12% 7.84% 6.31% 5.47% 7.84% 7.19% 6.77% 6.50% 5.78%Large Company Value Stock Option 1.50% 12.71% -1.13% 5.80% 4.47% -1.13% 6.04% 11.38% -2.86% 3.73%Russell 1000 Value 2.02% 13.11% 0.39% 6.58% 4.65% 0.39% 7.68% 11.55% -2.64% 3.89%Stock Index Option 0.80% 12.12% 0.86% 5.75% 4.15% 0.86% 8.56% 14.76% -0.13% 3.32%Russell 3000 0.82% 12.12% 1.03% 6.00% 4.36% 1.03% 8.69% 14.88% -0.01% 3.51%Large Company Growth Stock Option -0.43% 10.27% 1.61% 4.23% 3.22% 1.61% 8.53% 17.64% 1.31% 2.35%Russell 1000 Growth -0.32% 10.61% 2.64% 4.77% 3.46% 2.64% 9.45% 18.02% 2.50% 2.60%International Stock Option -2.27% 4.92% -13.43% 5.04% 5.97% -13.43% -2.78% 8.54% -4.26% 5.33%MSCI EAFE -0.95% 3.33% -12.14% 3.53% 5.02% -12.14% -2.70% 7.65% -4.72% 4.67%Small/Mid-Size Company Stock Option 0.08% 14.28% -3.41% 9.29% 8.44% -3.41% 10.62% 18.78% 2.20% 7.20%Russell 2500 0.23% 14.52% -2.51% 8.16% 7.86% -2.51% 11.14% 18.41% 1.24% 6.57%LifePath® Retirement 0.34% 4.15% 3.54% 3.54% 7.08% 10.07%LifePath® 2015 0.26% 4.81% 2.39% 2.39% 6.93% 11.06%LifePath® 2020 0.18% 5.51% 0.99% 0.99% 6.66% 11.61%LifePath® 2025 0.18% 6.34% 0.03% 0.03% 6.46% 12.20%LifePath® 2030 0.09% 6.76% -1.07% -1.07% 6.29% 12.58%LifePath® 2035 -0.02% 7.19% -2.00% -2.00% 5.92% 12.96%LifePath® 2040 -0.02% 7.86% -2.75% -2.75% 5.82% 13.36%LifePath® 2045 -0.23% 8.06% -3.53% -3.53% 5.59% 13.58%LifePath® 2050 -0.23% 8.51% -4.16% -4.16% 5.44% 14.09%**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considereda representation of performance of the options in the future. Investment returns and principal are not guaranteed.
Annualized
Monthly performance results are published on the PERS web page at www.pers.state.or.usTo access current account information 24 hours a day call our Customer Service Center at 1-800-365-8494.
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LifePath® Index Retirement Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index RetirementCustom Benchmark
Morningstar Category
Target Date 2000-2010Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average Below AverageSee disclosure for details.
Investment InformationInvestment Strategy
The LifePath® Index Retirement Fund is designed forparticipants who are close to, or already retired. Thisportfolio is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection.
By investing in a LifePath® Index Fund you may capturediversified investment opportunities without having to worryabout the day-to-day management of your money.
Rather than trying to mix and manage a collection ofdifferent funds, you only need to select one LifePath® IndexFund to access a well-diversified investment mix for aparticular target year allocation.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 08-01-05Total Fund Assets ($mil) 518.83Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively smallrange of price fluctuations relative to other investments.Based on this measure, currently more than two thirds of allinvestments have shown higher levels of risk. Consequently,this investment may appeal to investors looking for aconservative investment strategy.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
US Debt Index Fund E 53.15Equity Index Fund E 18.48BlackRock MSCI ACWI ex-US IMI Index Fund E 9.20US TIPS Fund E 9.04Extended Equity Market Fd E 5.98...........................................................................................................DJ-UBS Commodity Daily Fd E 3.54Developed Real Estate Index Fd E 0.61
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 34.88
� Sensitive 41.16
� Defensive 23.96
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 47.45 32.05� Corporate 15.92 23.39� Securitized 24.31 15.89� Municipal 0.70 0.42 Cash & Equivalents 11.61 20.37 Other 0.00 7.88
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
5.01 . 4.19 10.29 3.72 3.72 Fund Return %. . 4.23 10.47 3.85 3.85 Benchmark Return %................................................................................................................................................................................................................. . QQQQQ QQQ . . Morningstar Rating™
The LifePath Index Retirement Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the
fund's administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year
to limit the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index Retirement Fund F (inception date of 08/01/05). The LifePath Index Fund F returns
are gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $13,683 Benchmark $13,756
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641087 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2015 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2015 CustomBenchmark
Morningstar Category
Target Date 2011-2015Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average LowSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2015 Fund is designed forparticipants who expect to retire between 2013 and 2017.The LifePath® Index 2015 Fund will reach its mostconservative risk level at the end of 2014, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 07-05-06Total Fund Assets ($mil) 555.49Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively smallrange of price fluctuations relative to other investments.Based on this measure, currently more than two thirds of allinvestments have shown higher levels of risk. Consequently,this investment may appeal to investors looking for aconservative investment strategy.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
US Debt Index Fund E 46.68Equity Index Fund E 22.45BlackRock MSCI ACWI ex-US IMI Index Fund E 11.70US TIPS Fund E 7.78Extended Equity Market Fd E 6.37...........................................................................................................DJ-UBS Commodity Daily Fd E 3.52Developed Real Estate Index Fd E 1.50
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 35.97
� Sensitive 40.44
� Defensive 23.58
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 46.85 28.15� Corporate 15.84 20.05� Securitized 24.15 15.07� Municipal 0.70 0.54 Cash & Equivalents 12.46 24.29 Other 0.00 11.89
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
4.39 . 2.88 11.28 2.57 2.57 Fund Return %. . 2.93 11.47 2.64 2.64 Benchmark Return %................................................................................................................................................................................................................. . QQQQQ QQQ . . Morningstar Rating™
The LifePath Index 2015 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Fund F series of the same year. Returns prior to 01/02/08 are
those of the LifePath Index 2015 Fund F (inception date of 07/05/06). The LifePath Index Fund F returns are gross of an
annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI ex-U.S. IMI
Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected Securities Fund E,
Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money Market Fund. All
income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $12,523 Benchmark $12,551
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641005 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2020 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2020 CustomBenchmark
Morningstar Category
Target Date 2016-2020Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average LowSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2020 Fund is designed forparticipants who expect to retire between 2018 and 2022.The LifePath® Index 2020 Fund will reach its mostconservative risk level at the end of 2019, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 08-01-05Total Fund Assets ($mil) 948.80Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively smallrange of price fluctuations relative to other investments.Based on this measure, currently more than two thirds of allinvestments have shown higher levels of risk. Consequently,this investment may appeal to investors looking for aconservative investment strategy.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
US Debt Index Fund E 38.39Equity Index Fund E 27.18BlackRock MSCI ACWI ex-US IMI Index Fund E 14.53Extended Equity Market Fd E 6.98US TIPS Fund E 6.20...........................................................................................................DJ-UBS Commodity Daily Fd E 3.66Developed Real Estate Index Fd E 3.06
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 37.44
� Sensitive 39.52
� Defensive 23.06
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 45.69 26.24� Corporate 15.64 21.10� Securitized 23.76 14.99� Municipal 0.69 0.55 Cash & Equivalents 14.23 27.16 Other 0.00 9.97
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
4.19 . 2.14 11.84 1.16 1.16 Fund Return %. . 2.19 12.08 1.30 1.30 Benchmark Return %................................................................................................................................................................................................................. . QQQQQ QQQ . . Morningstar Rating™
The LifePath Index 2020 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2020 Fund F (inception date of 08/01/05). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $13,013 Benchmark $13,081
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641014 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2025 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2025 CustomBenchmark
Morningstar Category
Target Date 2021-2025Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average LowSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2025 Fund is designed forparticipants who expect to retire between 2023 and 2027.The LifePath® Index 2025 Fund will reach its mostconservative risk level at the end of 2024, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 07-05-06Total Fund Assets ($mil) 619.73Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
US Debt Index Fund E 31.49Equity Index Fund E 31.12BlackRock MSCI ACWI ex-US IMI Index Fund E 17.05Extended Equity Market Fd E 7.61US TIPS Fund E 4.87...........................................................................................................Developed Real Estate Index Fd E 4.33DJ-UBS Commodity Daily Fd E 3.54
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 38.26
� Sensitive 38.99
� Defensive 22.74
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 44.54 24.20� Corporate 15.49 20.79� Securitized 23.43 14.66� Municipal 0.68 0.54 Cash & Equivalents 15.87 26.26 Other 0.00 13.56
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
3.36 . 1.51 12.42 0.20 0.20 Fund Return %. . 1.53 12.59 0.17 0.17 Benchmark Return %................................................................................................................................................................................................................. . QQQQ QQQ . . Morningstar Rating™
The LifePath Index 2025 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2025 Fund F (inception date of 07/05/06). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $11,885 Benchmark $11,886
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641023 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2030 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2030 CustomBenchmark
Morningstar Category
Target Date 2026-2030Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQQ Above Average LowSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2030 Fund is designed forparticipants who expect to retire between 2028 and 2032.The LifePath® Index 2030 Fund will reach its mostconservative risk level at the end of 2029, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 08-01-05Total Fund Assets ($mil) 819.45Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
Equity Index Fund E 34.57US Debt Index Fund E 25.46BlackRock MSCI ACWI ex-US IMI Index Fund E 19.21Extended Equity Market Fd E 8.23Developed Real Estate Index Fd E 5.23...........................................................................................................DJ-UBS Commodity Daily Fd E 3.79US TIPS Fund E 3.51
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 38.65
� Sensitive 38.74
� Defensive 22.60
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 42.27 20.79� Corporate 15.22 20.79� Securitized 22.91 11.68� Municipal 0.66 0.46 Cash & Equivalents 18.93 35.39 Other 0.00 10.88
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
3.59 . 0.91 12.80 -0.90 -0.90 Fund Return %. . 0.92 13.03 -0.83 -0.83 Benchmark Return %................................................................................................................................................................................................................. . QQQQQ QQQQ . . Morningstar Rating™
The LifePath Index 2030 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2030 Fund F (inception date of 08/01/05). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $12,540 Benchmark $12,585
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641032 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2035 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2035 CustomBenchmark
Morningstar Category
Target Date 2031-2035Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average Below AverageSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2035 Fund is designed forparticipants who expect to retire between 2033 and 2037.The LifePath® Index 2035 Fund will reach its mostconservative risk level at the end of 2034, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 07-05-06Total Fund Assets ($mil) 435.49Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
Equity Index Fund E 37.71BlackRock MSCI ACWI ex-US IMI Index Fund E 21.26US Debt Index Fund E 20.05Extended Equity Market Fd E 8.52Developed Real Estate Index Fd E 6.22...........................................................................................................DJ-UBS Commodity Daily Fd E 3.58US TIPS Fund E 2.67
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 39.08
� Sensitive 38.47
� Defensive 22.46
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 40.74 19.16� Corporate 14.91 19.25� Securitized 22.27 11.05� Municipal 0.64 0.43 Cash & Equivalents 21.44 34.16 Other 0.00 15.96
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
2.46 . 0.34 13.19 -1.83 -1.83 Fund Return %. . 0.36 13.41 -1.73 -1.73 Benchmark Return %................................................................................................................................................................................................................. . QQQQ QQQQ . . Morningstar Rating™
The LifePath Index 2035 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2035 Fund F (inception date of 07/05/06). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $11,347 Benchmark $11,346
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641041 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2040 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2040 CustomBenchmark
Morningstar Category
Target Date 2036-2040Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average Below AverageSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2040 Fund is designed forparticipants who expect to retire between 2038 and 2042.The LifePath® Index 2040 Fund will reach its mostconservative risk level at the end of 2039, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 08-01-05Total Fund Assets ($mil) 535.50Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
Equity Index Fund E 40.56BlackRock MSCI ACWI ex-US IMI Index Fund E 23.12US Debt Index Fund E 15.18Extended Equity Market Fd E 8.84Developed Real Estate Index Fd E 7.16...........................................................................................................DJ-UBS Commodity Daily Fd E 3.58US TIPS Fund E 1.55
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 39.43
� Sensitive 38.24
� Defensive 22.33
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 37.18 15.88� Corporate 14.58 18.18� Securitized 21.53 8.63� Municipal 0.62 0.39 Cash & Equivalents 26.09 45.09 Other 0.00 11.83
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
2.99 . -0.19 13.59 -2.59 -2.59 Fund Return %. . -0.19 13.74 -2.57 -2.57 Benchmark Return %................................................................................................................................................................................................................. . QQQQ QQQQ . . Morningstar Rating™
The LifePath Index 2040 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2040 Fund F (inception date of 08/01/05). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $12,081 Benchmark $12,121
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641050 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2045 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2045 CustomBenchmark
Morningstar Category
Target Date 2041-2045Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQ Average AverageSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2045 Fund is designed forparticipants who expect to retire between 2043 and 2047.The LifePath® Index 2045 Fund will reach its mostconservative risk level at the end of 2044, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 07-05-06Total Fund Assets ($mil) 207.02Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
Equity Index Fund E 43.23BlackRock MSCI ACWI ex-US IMI Index Fund E 24.73US Debt Index Fund E 11.18Extended Equity Market Fd E 9.19Developed Real Estate Index Fd E 7.82...........................................................................................................DJ-UBS Commodity Daily Fd E 3.84
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 39.56
� Sensitive 38.15
� Defensive 22.29
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 29.17 18.19� Corporate 14.46 22.79� Securitized 21.00 12.23� Municipal 0.61 0.36 Cash & Equivalents 34.76 41.44 Other 0.00 4.99
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
1.64 . -0.67 13.82 -3.36 -3.36 Fund Return %. . -0.69 14.03 -3.37 -3.37 Benchmark Return %................................................................................................................................................................................................................. . QQQ QQQQ . . Morningstar Rating™
The LifePath Index 2045 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2045 Fund F (inception date of 07/05/06). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $10,891 Benchmark $10,871
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641069 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
LifePath® Index 2050 Fund Q...........................................................................................................................................................................................................................................................................................................................................Benchmark
LifePath® Index 2050 CustomBenchmark
Morningstar Category
Target Date 2050+Overall Morningstar Rating™ Morningstar Return Morningstar Risk
QQQQ Above Average HighSee disclosure for details.
Investment InformationInvestment Strategy
By investing in a single LifePath® Index Fund you maycapture diversified investment opportunities without havingto worry about the day-to-day management of your money.Each fund's objective is to maximize total return with a risklevel that may be appropriate for the fund's particulartimeframe.
The LifePath® Index 2050 Fund is designed forparticipants who expect to retire between 2048 and 2052.The LifePath® Index 2050 Fund will reach its mostconservative risk level at the end of 2049, at which time itwill be blended into the LifePath® Index Retirement Fund,which is designed to provide those who are withdrawingmoney from their plan with an appropriate blend of incomeand inflation protection. It does this by holding a mix ofstocks (approximately 38%) and fixed income instruments.
Fees and Expenses as of 12-31-11
Investment Management Fee 0.10%Administrative Fee 0.02%
Operations and Management
Product Inception Date 01-02-08Strategy Inception Date 09-30-07Total Fund Assets ($mil) 172.71Investment Manager BlackRock Institutional Trust
Company NA
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declinesor price increases depending on market conditions. Some ofthis risk may be offset by owning other investments withdifferent portfolio makeups or investment strategies.
NotesThe fund's custom benchmark is a representation of theperformance of the underlying funds' benchmarks accordingto the LifePath® model weights. The index weightingsincluded in the custom benchmarks are adjusted quarterly toreflect the funds' asset allocation shifts over time. Thefollowing indices may be used in such calculation: S&P 500Index, The Dow Jones U.S. Completion Total Stock MarketIndex, MSCI ACWI ex-US IMI Index, Barclays Capital U.S.Aggregate Bond Index, Barclays Capital U.S. TIPS Index,FTSE EPRA/NAREIT Developed Index, Dow Jones-UBSCommodity Index, and the Citigroup 3 Month T-Bill Index.
Allocation of Stocks and BondsAllocation
BondsU.S. StocksNon-U.S. StocksOther
100%
0
80
60
40
20
Years Until Retirement45 40 30 20 10 0 -5
Portfolio AnalysisTop 10 Holdings as of 12-31-11 % Assets
Equity Index Fund E 45.71BlackRock MSCI ACWI ex-US IMI Index Fund E 26.18Extended Equity Market Fd E 9.54Developed Real Estate Index Fd E 8.76US Debt Index Fund E 5.97...........................................................................................................DJ-UBS Commodity Daily Fd E 3.84
Morningstar Super Sectors as of 12-31-11 % Fund
� Cyclical 39.87
� Sensitive 37.96
� Defensive 22.17
Morningstar F-I Sectors as of 12-31-11 % Fund % Category
� Government 22.87 13.56� Corporate 11.95 15.87� Securitized 16.46 7.68� Municipal 0.48 0.28 Cash & Equivalents 48.26 51.68 Other 0.00 10.93
Performance
5
10
15
20
0
-5
-10
-15
Total Return%
as of 12-31-11InvestmentBenchmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
-2.99 . . 14.33 -4.00 -4.00 Fund Return %. . . 14.56 -4.08 -4.08 Benchmark Return %................................................................................................................................................................................................................. . . QQQQ . . Morningstar Rating™
The LifePath Index 2050 Fund Q returns are net of an annual management fee of 0.10%. The returns are net of the fund's
administrative costs, including, but not limited to accounting, custody, and audit fees, and capped at 0.02% per year to limit
the impact on fund performance.
The fund invests all of its assets in the respective LifePath Index Fund F series of the same year. Returns prior to
01/02/08 are those of the LifePath Index 2050 Fund F (inception date of 09/30/07). The LifePath Index Fund F returns are
gross of an annual management fee. It holds units of the following underlying funds: Equity Index Fund E, MSCI ACWI
ex-U.S. IMI Index Fund E, Extended Equity Market Fund E, U.S. Debt Index Fund E, U.S. Treasury Inflation Protected
Securities Fund E, Developed Real Estate Index Fund E, Dow Jones-UBS Commodity Index Daily Fund E, and the Money
Market Fund. All income is reinvested in the portfolios. Past performance does not guarantee future results.
Growth of $10,000 as of 12-31-11 Investment $8,790 Benchmark $8,786
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 - 11
25
20
15
5
0
10K
Release Date: 12-31-2011
641078 ©2012 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of information. Past performance is noguarantee of future performance. Visit our investment website at www.morningstar.com.
Page 1 of 4
This report was prepared by Arnerich Massena, Inc. using some or all of the following resources: data from plan trustees and custodians and their statements; returns and product or account information as reported by mutual funds, investment managers, and by third party services; and returns and valuations from outside sources as directed by the client.
Portions of the report were also prepared using secondary data from Mellon Analytical Services LLC, and Morningstar, Inc. Arnerich Massena Inc., Morningstar Inc., and Mellon Analytical Services LLC do not assume responsibility for the accuracy of these valuations or return methodologies, though reasonable care has been taken to assure the accuracy of the information provided by the software application.
This report was produced for performance measurement and informational purposes only. Plan Sponsors and/or participants should refer to account statements for cost basis or tax related information. In certain cases, estimates may have been used dependent on the timeliness and availability of information from the underlying managers.
Care has been taken in the preparation of this report and review of the information provided. However, Arnerich Massena, Inc. makes no warranties regarding, and disclaims responsibility for, the accuracy or completeness of such information.
Disclaimer of Warranties and Limitation of Liability
Symbol Performance Style Consistency Expense Ratio Tenure
Above Expectations25th Percentile and Better No change in last 36 months .01% or more below average Consistent
Meeting Expectations26th to 50th Percentile Change in last 25-36 months .01% to .09% below average N/A
Marginal51st to 75th Percentile Change in last 13-24 months .01% to .09% above average Not Consistent
Below Expectations76th Percentile and Below Change in last 12 months .01% or more above average N/A
Fund Manager Review Key
20
Stable value funds have not escaped the financial crisis of 2008. Long used by plan sponsors and participants for their stability, liquidity, and outperformance of money market funds, stable value may be facing its own version of the shifting landscape, prompting the need for deeper scrutiny. Investors likely don’t need to fear a 7.0 magnitude quake, but the marketplace is definitely experiencing tremors.
Prior to the credit crisis, wide competition meant that stable value wrap providers offered their services with low fees and competitive contract terms. But with the crisis prompting lower market-to-book ratios and now with historically low interest rates making it difficult to provide competitive yield, the wrap market is experiencing some crumbling. Not only are there fewer wrap providers, but those still offering services have raised fees and tightened the terms of their contracts. For instance, wrap providers are instituting tighter investment guidelines and stricter equity wash provi-sions. Some stable value funds, like the Schwab Stable Value Fund, are closing entirely because the market has become less favorable to stable value.
Additionally, the Dodd-Frank bill may affect stable value funds. If wrap contracts are classified as swap securities (still under consideration by regulators), tighter regulations may put further pressure on wrap providers and fund managers.
Does this mean that the bottom is dropping out and that you should eliminate stable value from your fund lineup? Not necessarily. But it does mean that you may want to take a closer look and gauge the rumblings in your stable value solution. Will your plan’s stable value fund be able to continue to provide a premium over money market funds at a reasonable cost? What are the equity wash provisions of the fund? Will par-ticipants be able to move their money should market-to-book value drop, and will that affect the return for those still in the fund? Has the fund manager altered the strategy of the fund? How have the stable value tremors impacted your fund?
In terms of comparison and alternatives, there are several asset classes you may want to examine:
Money market funds
Money market funds invest in short-term (maturing in less than one year) securities such as Treasury bills and commercial paper. The funds are regulated by the Investment Company Act of 1940, as amended, to have specific quality, maturity, and diversification require-ments. Since the funds have very low durations, the potential for losses is marginal but does exist, though instances have been rare. With the Federal Reserve and other central banks keeping short-term rates near zero, money market funds currently offer marginal,
The Shift in Stable ValueFIDUCIARY AND INVESTMENT INSIGHT
INSIDE: FIDUCIARY AND INVESTMENT INSIGHT • DC TIP
For plan sponsor use only.
Continued on page 4
DC Solutions™
Retirement Plan Resource
WINTER 2012
21
© 2012 Arnerich Massena Education, Inc., 2045 NE Martin Luther King Jr. Blvd., Portland, OR 97212 • www.arnerichmassenaeducation.com All rights reserved. This newsletter is an educational tool; it does not advise or recommend specific investments or investment strategies. • Editor: Ximena Spicer • Contributors: Tony Arnerich, Sarah Beaubien, Karl Hausafus, Eric Messer, Molly Thurston Parker, Jillian Perkins, Travis Pruit, and Liz Skourtes • Design: Kristina Barton
For plan sponsor use only.
The Profit Sharing/401(k) Council of America’s (PSCA) 54th Annual Survey of Profit Sharing and 401(k) Plans (reflecting 2010 plan experience) shows some significant shifts occurring in defined contribu-tion and defined benefit plans over the past year.
Participant contributionsThe number of plans offering Roth contributions is growing, albeit slowly, jumping from about 41 percent to more than 45 percent. The average deferral rate for pre-tax contributions was 6.6% for higher-paid employees (a slight drop) and 5.3% for lower-paid employees (a slight increase). Roth contributions averaged 4.0% of salary for higher-paid employees, down from 4.8%, and 3.5% for lower-paid employees, down from 4.0%.
Employer contributionsIn 2009, 11.2 percent of plans suspended their employer match. The match made a comeback in 2010, with only 2.1 percent of employers suspend-ing it. However, 6.6 percent of plans made no company contribution in 2010, compared with only 4.2 percent in 2009.
Investment optionsWhile the percentage of plans offering target-date funds didn’t change much (from 62 to 64 percent), it appears that balanced funds and lifestyle funds are becoming less popular. In 2009, more than 75 percent of plans offered balanced funds, while only about 62 percent did so in 2010. Lifestyle funds were offered in 36 percent of plans in 2009, but only
22 percent in 2010; more telling is the percentage of total plan assets invested in lifestyle funds, which dropped from 3.9% to 1.6%. On the other hand, lifestyle funds are the default investment option in 26.9 percent of plans, up from 19.9 percent of plans in 2009. Target-date funds decreased as the default investment from 57 percent of plans to just over 53 percent of plans. The average number of investment options offered remained the same: 18.
Automatic featuresAutomatic enrollment is gaining ground — 38.4 percent of plans had the feature in 2009, jumping to 41.8 percent of plans in 2010. Auto-matic escalation, on the other hand, decreased slightly, employed in 37.9 percent of plans with automatic enrollment versus 39.7 percent of those plans in 2009.
Retirement incomeDespite the recent focus on retirement income, annuity options decreased as an offering. Only 16.6 percent of plans in 2010 offered an annuity option, compared with 18.9 percent in 2009.
As the retirement plan industry changes and trends rise and fall, it’s okay if your plan doesn’t fit into the averages. More important is that your plan is designed optimally for your participants, which may or may not mean using the latest tools or fads. You can use statistical information to help gauge the effectiveness of your plan, but ultimately, look to participant success as the best measure.
What’s Changing in the Retirement Plan World?
INDUSTRY TREND
22
2011 was a year of intense volatility. A series of eco-nomic shocks throughout the year caused uncertainty in global markets. The U.S. economy fell short of the best-case scenario some hoped for; measures of activ-ity offered mixed news, such as varying employment reports, strong year-over-year retail sales reports, and weak housing data. The European sovereign debt crisis persisted throughout the year, with rumors of consensus among the European Union member nations changing daily for better or worse. Several major issues seemed to come to a head in the third quarter, which drove a major correction in global stock markets. Hope for a solution to the European debt crisis dimmed as the year closed, causing concerns over its impact and increasing the potential for another recession in the region. The U.S. Congress managed to arrive at a last-minute agreement in the debt ceiling debate and founded a committee to research a solution, which subsequently failed to do so. Not all nations are facing lackluster economic growth, however; some emerging nations’ economies are growing at such a pace that it is leading their central banks to raise interest rates in order to cool their economies and prevent excess inflation.
Global economics will not be the only source of anxiety in 2012. Political events also promise to be intriguing. In the U.S., the presidential election will serve as a backdrop throughout the year, and politicos will begin an early showdown over the payroll tax cut, recently extended only through the end of February. At a time when their government’s AAA credit rating has been questioned, the French
will vet their president, potentially leading to a new power player in the Euro saga alongside German Chancellor Angela Merkel. The beginning of 2012 brings with it a full basket of uncertainties.
BondsBond returns were varied throughout the year, but on the whole were strong. Capital poured into fixed income mutual funds, keeping yields low and generating another solid year of performance. The crisis in Europe drove investors to the perceived quality of U.S. Treasuries, which saw significant price increases. Corporate bonds had mixed results; they began the year close to Treasuries, but posted some negative returns with the flight to quality in the third quarter. The Fed’s actions in the Treasury market through “Operation Twist” helped pull down longer-term interest rates while short-term rates rose marginally.
StocksStocks were volatile throughout the year, but the S&P 500 ended the year marginally positive. High-quality large company stocks outperformed for the year by outpacing mid company and small company stocks and by preserving capital in the down market. Internationally, European stocks fared poorly due to the debt crisis and growth worries, Japan rebounded strongly from the tsunami catas-trophe and the soaring yen, and emerging markets stocks posted some of the worst returns internation-ally as investors shied away from risk.
For plan sponsor use only.
Now is the Winter of Our UncertaintyYear-end market commentary as of December 31, 2011
INVESTMENT INSIGHT
23
Quarter
For plan sponsor use only.
Plan Your YearDC TIP
2012
Quarter2012
Quarter2012
Quarter2012
2012 will most likely be known to plan sponsors and providers as the “year of fee disclosure.”
Plan ahead to make it a smooth ride, and consider taking the second half of the year to refocus attention on the value of saving and investing for retirement.
1st Make sure you are ready for fee disclosure. Work with your administrator to develop your fee disclosure communication. Develop a plan for how to address participant questions and concerns.
2nd Think about offering direct assistance to help participants understand the fees they are seeing for the first time. You could host seminars, provide individual sessions, or even offer phone consultations. You may be able to avoid issues arising from misunderstandings by being proactive rather than reactive.
3rd Consider hosting a benefits fair or 401(k)/403(b) Day. Remind participants of the value of their retirement plan, and help them learn how to best take advantage of it. By focusing on retirement for a day (or even a week), you can call attention to the importance of:
• Participatingintheplan • Makingthemostofthematch• Calculatingasavingsgoal • Increasingyoursavings• Rebalancingyourportfolio
4th The last quarter of the year will be mostly spent preparing for 2013. This is a great time to conduct participant surveys; the information you receive can help you determine what changes (if any) to plan for the year ahead.
near-zero returns and many funds are forced to credit fees in order to preserve the $1 net asset value.
Low duration funds
Low duration funds invest in a bond portfolio with an average duration of one to three years. Strategies typically target a combination of income and return on capital. Because of their limited duration, low duration funds typically have less interest rate risk than total
return, intermediate, or “aggregate”-based bond funds, but the risk of capital losses exists if interest rates rise.
Blended portfolios
A recordkeeper may be able to commingle or unitize a combination of money market and low duration funds. This solution may be difficult to communicate easily to participants, resulting in lower usage than other options.
The Shift in Stable Value (continued)
24
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
Federal Funds Rate (Interest Rates)CPI-U (Inflation)
-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
Real GDP- Seasonally adjusted
Trendline (least squares fit)
Commentary
QTR YTD 1 3 5 10BC Aggregate Bond 1.1% 7.8% 7.8% 6.8% 6.5% 5.8%BC 1-3 Yr Gov't/Cred 0.2% 1.6% 1.6% 2.7% 4.0% 3.6%90 Day T-Bills 0.0% 0.1% 0.1% 0.1% 1.4% 1.9%BC Global Aggregate 0.2% 5.6% 5.6% 6.0% 6.5% 7.2%
Trailing Return (years)Performance
QTR YTD 1 3 5 10S&P 500 11.8% 2.1% 2.1% 14.1% -0.3% 2.9%Russell Midcap 12.3% -1.5% -1.5% 20.2% 1.4% 7.0%Russell 2000 15.5% -4.2% -4.2% 15.6% 0.2% 5.6%NASDAQ Composite 8.5% -0.5% -0.5% 19.5% 2.5% 3.7%DJ-UBS Commodity 0.3% -13.3% -13.3% 6.4% -2.1% 6.6%GSCI Commodity 9.0% -1.2% -1.2% 6.9% -2.8% 5.6%
Trailing Return (years)Performance
QTR YTD 1 3 5 10MSCI ACWI 7.3% -6.9% -6.9% 12.6% -1.4% 4.8%MSCI ACWI ex-US 3.8% -13.3% -13.3% 11.2% -2.5% 6.8%MSCI Europe 5.5% -10.5% -10.5% 8.6% -4.6% 4.9%MSCI Pacific -0.3% -13.6% -13.6% 7.6% -3.4% 5.8%MSCI EMF 4.4% -18.2% -18.2% 20.4% 2.7% 14.2%
Trailing Return (years)PerformanceUSA46% Canada
4%
Other5%
Europe24%
Japan8%
Emerging Markets
13%
-5.0%
0.0%
5.0%
May-09 March-10 January-11 November-11
Information is current as of 12/31/11, drawn from third-party sources believed reliable but not independently verified/guaranteed by Arnerich Massena, for educational purposes only and may not be reproduced/republished/distributed without our prior written consent. Investments/strategies discussed may not be suitable for all investors. Past performance is no guarantee of future returns. Questions/comments may be directed to your advisor.
Economic Overview
Fixed Income: Federal Funds Rate & CPI (Inflation) Fixed Income Indices
U.S. Equities: Gross Domestic Product U.S. Equity Indices
International: World Stock Market Capitalization International Indices
2011 was a year of intense volatility. A series of economic shocks throughout the yearcaused uncertainty in global markets. The U.S. economy fell short of the best-caserecovery scenario some hoped for. Measures of activity offered mixed news, such asvarying employment reports, strong year-over-year retail sales figures, and weak housingdata. The European sovereign debt crisis continues to be unresolved, with rumors ofconsensus among European Union member nations changing daily for better or worse.Hope dimmed for a solution to the European debt crisis as the year closed, causingconcerns over its impact and increasing the potential for another recession in the region.Among other nations, S&P has threatened to downgrade the sovereign debt of France. Inthe U.S., the Joint Select Committee on Deficit Reduction (the “Supercommittee”),
created after the debt-ceiling crisis in August, announced in November that it failed tocome to an agreement on a bipartisan solution. The impasse rekindled the long-termfiscal and debt issues in the U.S. A government shutdown became a threat again inDecember before Congress reached a budget deal to keep agencies operating throughSeptember 2012. The central banks of developed nations globally have continuedconcerted monetary stimulus policies to keep rates low and try to facilitate economicactivity. Not all nations are facing problems of lackluster economic growth, however.Some emerging markets nations are growing at such a pace that their central banks haveincreased interest rates in order to cool their economies and prevent excess inflation.
25
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
Client Projects and Analytics Update Investment Manager Update
In 4Q11, Arnerich Massena analysts attended 124 meetings and conferencecalls with investment managers; roughly 56% of those meetings involvedfunded products. Out of those 124 meetings, Arnerich Massena analystsattended on-site due diligence meetings located in: San Paolo, Brazil; PortoAlegre, Brazil; New York, NY; Hoboken, NJ; Teaneck, NJ; Rowayton, CT;Minneapolis, MN; Chicago, IL; Oakbrook Terrace, IL; Cleveland, OH;Birmingham, MI; Bartlesville, OK; Phoenix, AZ; Los Angeles, CA; SanFrancisco, CA; Palo Alto, CA; Menlo Park, CA; and Portland, OR.
In 4Q11, Arnerich Massena analysts conducted:
• 8 asset allocation and portfolio development studies• 25 manager search and document reviews, which included 15 specific assetclass searches
No new products were placed on Arnerich Massena’s Approved Manager List
by the Investment Committee.
Information is current as of 12/31/2011, drawn from third-party sources believed reliable but not independently verified/guaranteed by Arnerich Massena, for educational purposes only and may not be reproduced/republished/ distributed without our prior written consent. Investments/strategies discussed may not be suitable for all investors. Past performance is no guarantee of future returns. Questions/comments may be directed to your advisor.
Analytics News
Bottlenecks = Opportunities
2011 was another challenging year for fundamental equity investors; companies’ stock prices reflected the most recent headline news as opposed to company-specific events. Emotional investors became short-sighted amidst market volatility and risk-on, risk-off trading. We are all keenly aware that this short-term mentality presents challenges for long-term fundamental investors; however, challenges can often create opportunities if you look hard enough. The Analytical Department at Arnerich Massena is tasked with finding what we consider to be the best investment opportunities on a risk-adjusted basis for our clients. With that said, our analysts have been involved in several innovative investment strategies over the course of 2011.
We believe compelling long-term opportunities exist along the theme of population growth and resource scarcity, with a particular focus on the resources people need rather than want (energy, water, food, shelter, to name a few). In order to profit from this theme, we need to determine where and when potential bottlenecks may occur. Research suggests the world population crossed the 7 billion mark and will likely increase to 9 billion by 2050. Research also suggests current world agriculture output will need to double by 2050 to support this growth. Will bottlenecks occur in this area? If so, how can we profit from it? To answer these questions, our analysts traveled to remote areas of Nevada, California, Arizona, and Brazil.
Each of the strategies we analyzed offered various ways to invest in the resources (and bottlenecks) mentioned above. For example, the strategy in Nevada focuses on converting agricultural water to higher-yielding uses. Alternate uses include supplying water-stressed municipalities to support population growth, or industrial uses like pumped-storage hydroelectricity. Brazil also offers compelling investment opportunities. We toured several rice farms, storage facilities, and a processing plant in the “rice belt” of Brazil where very few foreign investors have allocated to date; most foreign investment is being channeled into soybean farms far north of this area. This is an opportunity to own one of the world’s most prominent staple foods: rice. We will continue to vet investment opportunities related to population growth and resource scarcity. 2012 promises to be another interesting year spent sourcing compelling ideas for our clients as our team plans to visit companies and investment managers in Asia and Europe.
26
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
0.0
1.0
2.0
3.0
4.0
5.0
3mos 6mos 2yr 5yr 10yr 30yr
1.6%0.2%
0.4%1.8%
Fixed Income Markets Overview
Commentary
Short Term and Low Duration Indices
Intermediate and Long Duration Indices
Other Indices
Yield Curve
Barclays Capital 1-3 Yr Gov’t/Credit Index Sector Weights & Returns
Barclays Capital Aggregate Bond Index Sector Weights & Returns
Trailing 12-Month QuarterWeight
9.0%
6.2%
8.4%
5.1%
0.8%
1.0%
1.7%
0.2%
40.7% Governments
33.8% Mortgages
25.2% Corporates
0.2% Asset Backed
Weight
12/31/10
12/31/11
Trailing 12-Month Quarter Duration QTR YTD 1 3 5 1090 Day T-Bills 90 Days 0.0% 0.1% 0.1% 0.1% 1.4% 1.9%BC 1-3 Yr Gov't/Credit 1.9 Years 0.2% 1.6% 1.6% 2.7% 4.0% 3.6%
Trailing Return (years)Performance
Duration QTR YTD 1 3 5 10BC Int Agg Bond 3.6 Years 0.9% 6.0% 6.0% 6.2% 6.1% 5.4%BC Aggregate Bond 5.0 Years 1.1% 7.8% 7.8% 6.8% 6.5% 5.8%BC Government Bond 5.6 Years 0.8% 9.0% 9.0% 4.0% 6.6% 5.6%BC US TIPS 4.2 Years 2.7% 13.6% 13.6% 10.4% 8.0% 7.6%BC Muni Bond Index 8.1 Years 2.1% 10.7% 10.7% 8.6% 5.2% 5.4%
Trailing Return (years)Performance
Duration QTR YTD 1 3 5 10BC High Yield Bond 4.2 Years 6.5% 5.0% 5.0% 24.1% 7.5% 8.9%BC Mortgage 2.9 Years 0.9% 6.2% 6.2% 5.8% 6.5% 5.7%BC Majors ex-US 7.4 Years -0.2% 6.0% 6.0% 5.6% 7.9% 8.5%
Trailing Return (years)Performance
%
75.8% Governments
0.0% Mortgages
24.2% Corporates
0.0% Asset Backed
Information is current as of 12/31/11, drawn from third-party sources believed reliable but not independently verified/guaranteed by Arnerich Massena, for educational purposes only and may not be reproduced/republished/distributed without our prior written consent. Investments/strategies discussed may not be suitable for all investors. Past performance is no guarantee of future returns. Questions/comments may be directed to your advisor.
Throughout the year, the fixed income space was eventful with the Federal Reserve’squantitative easing, the ongoing crisis in Europe, and investors continuing to seek therelative safety of fixed income assets. Shocks in the economy caused bond returns to varythroughout the year, but on the whole they were strong. The ongoing debt crisis inEurope drove investors to the perceived quality of U.S. Treasuries, which experiencedsignificant price increases. Corporate bonds had mixed results; they began the year closeto Treasuries, but posted negative returns during the flight to quality in the third quarter.Cash management remains a challenge as the yield curve remains steep, with rates nearzero at the short end. Fixed income markets may continue to be active in 2012 due tocontinuing macroeconomic uncertainty. As the year unfolds, investors will be watchingthe unresolved solvency issues surrounding the sovereign debt crisis in Europe and itsimpact on the U.S. fixed income markets. Furthermore, interest rates and inflation remainlooming concerns and may significantly impact fixed income performance in the comingquarters.
27
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
U.S. Equity Markets Overview
Large Cap: S&P 500 Index Sector Weights and Returns
13.1% Consumer Discretionary
3.7% Consumer Staples
6.7% Energy
22.1% Financials
12.7% Health Care
15.7% Industrials
17.2% Information Technology
4.5% Materials
0.8% Telecommunication Services
3.7% Utilities
Trailing 12-Month QuarterWeight
Trailing 12-Month QuarterWeight
QTR YTD 1 3 5 10S&P 500 11.8% 2.1% 2.1% 14.1% -0.3% 2.9%Russell 1000 Value 13.1% 0.4% 0.4% 11.5% -2.6% 3.9%Russell 1000 Growth 10.6% 2.6% 2.6% 18.0% 2.5% 2.6%
Trailing Return (years)Performance
QTR YTD 1 3 5 10Russell Midcap 12.3% -1.5% -1.5% 20.2% 1.4% 7.0%Russell Midcap Value 13.4% -1.4% -1.4% 18.2% 0.0% 7.7%Russell Midcap Growth 11.2% -1.7% -1.7% 22.1% 2.4% 5.3%
Trailing Return (years)Performance
QTR YTD 1 3 5 10Russell 2000 15.5% -4.2% -4.2% 15.6% 0.2% 5.6%Russell 2000 Value 16.0% -5.5% -5.5% 12.4% -1.9% 6.4%Russell 2000 Growth 15.0% -2.9% -2.9% 19.0% 2.1% 4.5%
Trailing Return (years)Performance
10.7% Consumer Discretionary
11.5% Consumer Staples
12.3% Energy
13.6% Financials
11.9% Health Care
10.7% Industrials
19.0% Information Technology
3.5% Materials
3.0% Telecommunication Services
3.9% Utilities
12.6%
10.3%
18.2%
10.8%
10.0%
16.5%
8.7%
15.4%
7.9%
8.3%
6.1%
14.0%
4.7%
-17.1%
12.7%
-0.6%
2.4%
-9.8%
6.3%
19.9%
Large Cap Indices
Mid Cap Indices
Small Cap Indices
Commentary
Small Cap: Russell 2000 Index Sector Weights and Returns
Information is current as of 12/31/11, drawn from third-party sources believed reliable but not independently verified/guaranteed by Arnerich Massena, for educational purposes only and may not be reproduced/ republished/ distributed without our prior written consent. Investments/strategies discussed may not be suitable for all investors. Past performance is no guarantee of future returns. Questions/comments may be directed to your advisor.
U.S. stocks came roaring back in the fourth quarter of 2011 as a sense ofconfidence returned to equity markets. Smaller capitalization stocks led theway during the quarter. Large cap stocks, however, fared significantly betterover the course of the year as investors favored the certainty of establishedcompanies with diversified lines of business over those more susceptible to thewaxes and wanes of the economy. While unemployment levels remainedelevated, U.S. consumers showed a willingness to look past the uncertainty andcontinued to reach into their pockets to spend. Cyclical stocks surged duringthe quarter as Energy, Industrials, and Materials led the rally, while defensivesectors such as Utilities, Consumer Staples, and Healthcare led the way for theyear. Financials continued to epitomize the volatility of the overall market asthe sector gained nearly 11% during the quarter but still declined by 17% forthe year. Stocks essentially ended the year where they began, although dailymarket observers likely suffered a spell of dizziness over that period.
14.5%
9.3%
22.7%
15.6%
11.9%
20.5%
14.6%
15.5%
8.9%
10.6%
-6.9%
7.8%
-8.1%
-4.2%
2.1%
-5.5%
-6.9%
-12.7%
-6.7%
16.6%
28
International Markets Weights U.S. Dollar vs. Local Currency Returns
QTR. 1-YR. 3-YR. 5-YR.
3.8% -13.3% 11.2% -2.5%
3.4% -11.7% 8.2% -4.3%
Europe (MSCI Europe) 5.5% -10.5% 8.6% -4.6%UK 9.1% -2.5% 15.0% -3.2%Germany 3.9% -17.5% 4.5% -3.3%France 2.8% -16.0% 2.7% -6.7%
Local % ChangeAsia/Pacific (MSCI Pacific) -0.3% -13.6% 7.6% -3.4% Currency 9/30/2011 12/31/2011 To US$Japan -3.9% -14.2% 1.8% -6.4%Hong Kong 6.3% -16.0% 18.3% 2.7% Yen 76.620 77.400 -1.0%Australia 7.5% -11.0% 21.6% 2.6% Euro 0.735 0.772 -5.0%
Pound 0.640 0.647 -1.1%Canada 5.2% -12.2% 18.8% 3.7% Swiss Franc 0.897 0.940 -4.7%
4.5% -18.2% 20.4% 2.7%Latin America (MSCI EM Latin America) 8.8% -19.2% 23.8% 6.8%Asia (MSCI EM Asia) 3.3% -17.2% 19.9% 2.9%Eur/M.East/Africa (MSCI EM Europe/Middle East) 0.5% -23.3% 17.4% -4.7%
4.2% -13.9% 11.2% -1.8%
3.4% -12.7% 11.2% -3.2%
0.8% -15.5% 16.9% -2.9%
Other Countries and Weights
Developed WT. Emerging WT.
Austria 0.2% Brazil 3.1%Belgium 0.7% Chile 0.4%
Denmark 0.7% China 4.2%Finland 0.6% Colombia 0.3%Greece 0.1% Czech Rep. 0.1%Ireland 0.2% Hungary 0.1%Israel 0.4% India 1.5%Italy 1.5% Indonesia 0.7%
New Zealand 0.1% Korea 3.4%Norway 0.6% Malaysia 0.8%
Netherlands 1.7% Mexico 1.1% Portugal 0.2% Peru -
Singapore 1.1% Philippines 0.2%Spain 2.3% Poland 0.3%
Sweden 2.1% Russia 1.5%Switzerland 5.9% South Africa 1.9%
Taiwan 2.6%Thailand 0.5%Turkey 0.3%
International Markets Overview
World Small (MSCI World Small Cap ex-US)
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
Exchange Rate as of
Returns (in U.S. Dollars)
World ex-US (MSCI ACWI ex-US)
Developed Markets (MSCI EAFE)
Emerging Markets (MSCI EM)
Country/Region
World Growth (MSCI ACWI Growth ex-US)
Commentary
World Value (MSCI ACWI Value ex-US)
4.5%
-18.
2%
20.4
%
2.7%4.9%
-12.
5%
17.7
%
3.4%
QTR. 3-YR. 5-YR.
3.4%
-11.
7%
8.2%
-4.3
%
4.1%
-11.
8%
5.2%
-6.2
%QTR. 3-YR.
5-YR.
U.S.$ Local Currency
Emerging (MSCI EM)
Developed (MSCI EAFE)
*The graph above and the weights below are a representation of the world's capital markets as expressed by the MSCI ACWI ex-US, a market capitalization weighted index combining the world's developed and emerging markets, excluding the United States.
U.S.$ Local Currency
The European sovereign debt crisis continued to dominate headlines and cause distress in capital markets. Proposedsolutions by the European Union were not widely percieved as effective by investors and called into question the long-termviability of the euro. Global markets swayed back and forth on any news regarding Greece, Spain, Italy, or the EU in general.Markets have been running on a “risk-on,” “risk-off” cycle for much of the year, and with that came high market volatility—largely due to news headlines coming out of the Eurozone rather than company fundamentals. The broad internationalmarket, as represented by the MSCI ACWI ex-US, was up 3.8% for the fourth quarter but was down 13.3% for the year,lagging behind the S&P 500 Index by a staggering 8.0% for the quarter and 15.4% for the year. The currency market has beenjust as volatile as equities; the euro rose against the dollar by over 6% in the summer only to end the year down 1.3%. U.S.Treasuries had their best year since 2008 as a flight from the Eurozone’s sovereign debt to the perceived safety of U.S debtcontinued. Emerging market economies have not been spared either; the MSCI Emerging Market Index was up 4.5% for thefourth quarter but down 18.2% for the year. Emerging market economies (Brazil, India, Russia, etc.) are now at a crossroads:They can continue to build their economies using a westernized financial and economic system that is proven but has shownserious flaws, or perhaps choose a more government-controlled economy like China's, which emphasizes more investmentand less consumer spending, and relies on exports to drive economic growth. The economic future continues to lookopaque for much of the international community; there are no easy fixes, and investors should be ready for the long haul asthe global markets attempt to heal.
100.0%
77.2%
44.8%
16.0%
5.4%
6.2%
24.0%
14.9%
1.9%
5.9%
8.5%
22.8%
4.9%
13.8%
4.1%
Developed Markets
Emerging Markets
World ex-US
Europe
UKGermany
France
Asia/Pacific
Japan
Hong Kong
Australia
Canada
Latin America
Asia
Europe/M. East/Africa
Information is current as of 12/31/11, drawn from third-party sources believed reliable but not independently verified/guaranteed by Arnerich Massena, for educational purposes only and may not be reproduced/republished/distributed without our prior written consent. Investments/strategies discussed may not be suitable for all investors. Past performance is no guarantee of future returns. Questions/comments may be directed to your advisor.
1-YR.
1-YR.
29
Annual Asset Class and Style Returns (1993 - Present)Indexes Ranked from Best to Worst Performance
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Int'l Stock Int'l Stock Large Cap
Value Large Cap Growth
Large Cap Value
Large Cap Growth
Mid Cap Growth
Small Cap Value
Small Cap Value
Fixed Income
Small Cap Growth
Mid Cap Value Int'l Stock Int'l Stock Int'l Stock
Fixed Income
Mid Cap Growth
Small Cap Growth
Fixed Income
34.9% 6.6% 38.4% 23.1% 35.2% 38.7% 51.3% 22.8% 14.0% 10.3% 48.5% 23.7% 17.1% 27.2% 17.1% 5.2% 46.3% 29.1% 7.8%
Small Cap Value
Large Cap Growth
Large Cap Growth
Large Cap Value
Mid Cap Value
Mid Cap Growth
Small Cap Growth
Mid Cap Value
Fixed Income
Mid Cap Value
Small Cap Value
Small Cap Value
Mid Cap Value
Small Cap Value
Large Cap Growth
Small Cap Value Int'l Stock
Mid Cap Growth
Large Cap Growth
23.8% 2.7% 37.2% 21.6% 34.4% 17.9% 43.1% 19.2% 8.4% -9.7% 46.0% 22.3% 12.7% 23.5% 11.8% -28.9% 42.1% 26.4% 2.6%
Large Cap Value
Small Cap Value
Mid Cap Value
Small Cap Value
Small Cap Value
Large Cap Value
Large Cap Growth
Fixed Income
Mid Cap Value
Small Cap Value
Mid Cap Growth Int'l Stock
Mid Cap Growth
Large Cap Value
Mid Cap Growth
Large Cap Value
Large Cap Growth
Mid Cap Value
Large Cap Value
18.1% -1.6% 34.9% 21.4% 31.8% 15.6% 33.2% 11.6% 2.3% -11.4% 42.7% 21.4% 12.1% 22.3% 11.4% -36.9% 37.2% 24.8% 0.4%
Mid Cap Value
Large Cap Value
Mid Cap Growth
Mid Cap Value
Large Cap Growth Int'l Stock Int'l Stock
Large Cap Value
Large Cap Value Int'l Stock Int'l Stock
Large Cap Value
Large Cap Value
Mid Cap Value
Small Cap Growth
Large Cap Growth
Small Cap Growth
Small Cap Value
Mid Cap Value
15.6% -2.0% 34.0% 20.3% 30.5% 14.5% 30.9% 7.0% -5.6% -14.7% 41.4% 16.5% 7.1% 20.2% 7.1% -38.4% 34.5% 24.5% -1.4%
Small Cap Growth
Mid Cap Value
Small Cap Growth
Mid Cap Growth
Mid Cap Growth
Fixed Income
Large Cap Value
Mid Cap Growth
Small Cap Growth
Large Cap Value
Mid Cap Value
Mid Cap Growth
Large Cap Growth
Small Cap Growth
Fixed Income
Mid Cap Value
Mid Cap Value
Large Cap Growth
Mid Cap Growth
13.4% -2.1% 31.0% 17.5% 22.5% 8.7% 7.4% -11.8% -9.2% -15.5% 38.1% 15.5% 5.3% 13.4% 7.0% -38.4% 34.2% 16.7% -1.7%
Mid Cap Growth
Mid Cap Growth
Small Cap Value
Small Cap Growth
Small Cap Growth
Mid Cap Value
Mid Cap Value Int'l Stock Int'l Stock
Mid Cap Growth
Large Cap Value
Small Cap Growth
Small Cap Value
Mid Cap Growth
Large Cap Value
Small Cap Growth
Small Cap Value
Large Cap Value
Small Cap Growth
11.2% -2.2% 25.8% 11.3% 13.0% 5.1% -0.1% -15.1% -19.5% -27.4% 30.0% 14.3% 4.7% 10.7% -0.2% -38.5% 20.6% 15.5% -2.9%
Fixed Income
Small Cap Growth
Fixed Income Int'l Stock
Fixed Income
Small Cap Growth
Fixed Income
Large Cap Growth
Mid Cap Growth
Large Cap Growth
Large Cap Growth
Large Cap Growth
Small Cap Growth
Large Cap Growth
Mid Cap Value
Mid Cap Growth
Large Cap Value Int'l Stock
Small Cap Value
9.8% -2.4% 18.5% 6.7% 9.7% 1.2% -0.8% -22.4% -20.2% -27.9% 29.8% 6.3% 4.2% 9.1% -1.4% -44.3% 19.7% 11.6% -5.5%
Large Cap Growth
Fixed Income Int'l Stock
Fixed Income Int'l Stock
Small Cap Value
Small Cap Value
Small Cap Growth
Large Cap Growth
Small Cap Growth
Fixed Income
Fixed Income
Fixed Income
Fixed Income
Small Cap Value Int'l Stock
Fixed Income
Fixed Income Int'l Stock
2.9% -2.9% 9.9% 3.6% 2.0% -6.5% -1.5% -22.4% -20.4% -30.3% 4.1% 4.3% 2.4% 4.3% -9.8% -45.2% 5.9% 6.5% -13.3%
This chart is intended to demonstrate the importance of diversificationby showing that different asset classes and styles have come in and out of favor over time.
The demonstration reinforces the importance of managing risk through diversification.
Arnerich Massena, Inc. ~ Quarter Ending December 31, 2011
Investment Representative Index Notes
Fixed Income BC Aggregate
Large Cap Value Russell 1000 Value
Large Cap Growth Russell 1000 Growth
Mid Cap Value Russell Mid Cap Value
Mid Cap Growth Russell Mid Cap Growth
Small Cap Value Russell 2000 Value
Small Cap Growth Russell 2000 Growth
International Stock MSCI ACWI ex-U.S. Developed and Developing Countries
Domestic equity style is a function of market capitalization, price-to-book ratio and I/B/E/S forecast long-term growth mean.
31
Notice of Privacy Policy You are receiving this notice in compliance with the Gramm-Leach-Bliley Act of 1999, as amended. At Arnerich Massena, Inc., maintaining your privacy is a priority. We recognize that the privacy and security of your nonpublic personal information is important to you, and we maintain safeguards designed to protect against unauthorized access. We do not sell this information to anyone and only disclose such information with others as permitted by law for the purpose of serving your investment needs. Why We Collect Your Information The information that we collect is either required or necessary to provide personalized investment services to you. Any information provided is kept confidential and allows us to:
service your account; deliver products/services of interest to you; guard against unauthorized access to your account(s); improve customer service; or comply with legal and regulatory requirements.
The Information We Collect Depending upon your relationship with us, we collect nonpublic personal information (such as full name, address, social security/federal tax identification number, telephone number, and account numbers and balances) from you:
on applications and other forms; through transactions, correspondence, and other communications; or in connection with providing you a financial product/service.
The Information We Disclose We do not share the information we collect about our customers (or former customers) with any third-parties, except as required or permitted by law. We may disclose information we collect to our affiliates and companies who help us to maintain and service your account(s). For example, we may share information with a money manager or clearing broker to process your transactions and update your account. These companies are authorized to use this information only in connection with the services for which we have hired them; they are not permitted to use or share this information for any other purpose. We may also disclose nonpublic personal information to government agencies and regulatory organizations when permitted or required by law. Protection of Information For your protection, we restrict access to your nonpublic personal information to those individuals who need to know that information in order to provide products/services to you. We maintain physical, electronic, and procedural safeguards that are designed to comply with federal standards to maintain the confidentiality of your nonpublic personal information. Updating and Correcting Your Account Information The accuracy of your personal information is important to us. You can correct, update, or confirm your personal information at any time by contacting our firm at 503-239-0475 or 800-929-5179.
33
Form ADV Part 2 Offer
Important disclosures regarding our business are provided in Form ADV Part 2A and Part 2B. This document provides information about Arnerich Massena in general, the services we offer, the fees we charge and other significant details. Our disclosure document is updated promptly when there are material changes in our business or business practices, and periodically to capture routine changes. Securities and Exchange Commission Rule 204-3, or the “Brochure Rule”, requires that we make available to clients our Form ADV Part 2. Upon request, Arnerich Massena will furnish a current copy of this document at no charge. If you are interested in a copy, please contact our offices at 503-239-0475 or 800-929-5179.
34
Auto Enrollment Survey Summary This survey was done to ask state employees what they thought about the possibility of automatically enrolling employees into the Oregon Savings Growth Plan (OSGP), essentially changing the default enrollment decision from an “opt-in” plan to an “opt-out” plan. The idea behind the change is to reduce the analysis paralysis that accompanies retirement saving and to financially benefit state workers. A common regret of retiree-aged workers is wishing they started saving earlier. In that sense, the current system more often hurts than helps a state employee. While the advantages are not immediately obvious, beginning a small deferment early in one’s career pays off. Over 4,500 employees responded. While some were very vocal in their opposition to auto-enrollment, the majority believe it is a good idea. The results are as follows: When asked if state employees felt they were saving enough for retirement:
• 62 percent of all respondents stated that they were not.
Asked if they knew about OSGP:
• 58 percent stated they were already enrolled in OSGP. Of those not
not, 33 percent said they could not afford it, and 30 percent said they didn’t know enough about it. Others responded that they wanted a Roth, some felt overwhelmed by the paperwork, and others thought they weren’t eligible because they were new employees and had not completed their six months.
enrolled, when asked why they were
Asked if they would support making OSGP an
• 60 percent of all respondents said they
Comments ranged from, “I think this is
hen asked if they supported auto-enrolling all
44 percent stated they supported
• 16 percent said they supported
sked about adding auto-escalation of
33 percent supported auto escalation
30 percent felt that the contribution
“opt-out” program:
would support making OSGP an “opt-out” program, while 37 percent said they would not support that decision.
a great idea to get people saving early,” to “I think this plan is too paternalistic and employees should have control over their own money.”
Wstate employees or just new hires:
•
automatically enrolling all existing and new state workers in OSGP, while 40 percent said they opposed automatically enrolling anyone in OSGP.
automatically enrolling only new employees.
Adeferments (increasing contributions by 1 percent in the first year up to 3 percent if the participation had not increased contributions on their own):
• •
should be left at 1 percent until participants chose to change it.
• 33 percent said they were opposed to
• For those who said they supported
eedback from respondents:
This is a great idea to help people save for the
auto enrollment and therefore auto escalation.
automatic enrollment, 38 percent said they liked the idea of increasing contributions annually up to 5 percent over a five-year period, 16 percent said they felt that going up to 3 percent was sufficient, and 45 percent said they preferred that it be left at 1 percent until participant changed it on their own.
F “future.” “Need to target new(er) employees and educate them on the importance of starting a plan. The 1% is a good start and is a way to get information to them about options they have about the program. I am one of those staff who are wishing I started sooner in the plan.” “This is a good idea and you should implement it despite protests. The best advice I got as a new hire - years ago from a caring supervisor, was to contribute to my retirement plan.” “Opt-in is the ONLY way enrollment SHOULD BE. Taking from a paycheck without an employee’s full knowledge is tantamount to THEFT. Rarely do clear instructions or options find their way to unaware contributors. WE STRONGLY DISAGREE WITH OPT-OUT.” “Very bad idea all around.” “Great idea to help people establish more for their later years. I just think people can think for themselves and don't like the idea of having deduction just taken out and hope I would remember before 90 days to take action.”
“THANKS YOU FOR THE OPPORTUNITY TO HAVE MY VOICE HEARD.” “I think the initial automatic enrollment amount should be 2% or 3%, and after 1 year employees should be allowed to increase or decrease that percentage as they choose.” “State Employees' paychecks are already under attack from Health Insurance premiums and Furlough Days. Not to mention the looming 3-6% PERS pick-up that's coming down the road. The overall impact will be, as usual, having to do more with less. This just makes it harder and harder to be able to afford to save, whether it's for retirement, or just a rainy day. Maybe this is all the more reason to encourage people to think, think, think about retirement, and where they'd like to be when they get there... They won't regret it!” “This process, if passed will eliminate procrastination of initial enrollment. Thanks.” “I think auto enrollment is a bad idea. Give the employees credit for being able to make good decisions for themselves given adequate information.” “It is a personal decision. I don't think the state has the right to demand someone set up a savings program. It is good information to provide and I do share what I do with others but it is still their choice.” “This is a great idea! I think people need a reality check when it comes to saving for retirement. OSGP would be well advised to hire people very skilled at communicating to young/new employees about the realities of paying for retirement.” “If the automatic enrollment does not get approved, then all new employees should receive some literature about the program and an email with clear and easy instructions on how to sign up. Investment examples would help ‘sell’ the idea to people. I really
appreciate the efforts OSGP has undergone to get the word out to employees. I brought Justin into our office to provide training and it was very useful.” “Leave my money alone!” “I believe you need to do a better job of communicating the severe problems associated with not having adequately prepared for retirement. It is absolutely devastating!” “My biggest concern is that during times of pay freezes and/or furloughs, an automatic escalation would be a huge burden on the employees. I could only support the program if escalations can be suspended during those times. I also don't like to limit the ‘opt out’ alternative to the first 90 days of employment. A year would be better.” “OSGP is a great program. Many of my coworkers choose to ignore it. If you have the budget, find a way to promote it more heavily.” “Thanks for asking for feedback.” “I find the thought of making this program an opt-out program bad. I find the thought of automatic contribution increases appalling.” Questions and comments from respondents: I was never told about OSGP when I was hired. OSGP sends plan information to HR departments across the state. We count on them to provide this information to new employees. We also send out welcome postcard to new hires. OSGP offers workshops across the state and employees can register on-line at: http://www.oregon.gov/PERS/OSGP/section/2012_osgp_workshop.shtml
I would like to see a Roth account. OSGP is adding a Roth 457 in 2012. Watch for more information about this new provision next year. It should be available on or about July 1. One of my family members is a teacher for the state of OR and has the opportunity to participate in a Roth 403-b, and I would like to know why I don't also have that option. As indicated in the response above, OSGP will be offering a Roth 457 in 2012. Participants will be able to contribute the maximum allowable limit to the Roth 457 ($17,000 in 2012) in the same manner they currently do on a pre-tax basis. I would consider enrolling and supporting your proposal if there were socially responsible options. While OSGP does not offer a socially responsible option at this time, you can find those options in the Self-Directed Brokerage Option which offers more than 6,000 mutual funds and ETFs. I am unsure how to invest. It is confusing to me. OSGP offers workshops on the investments in the plan. You can also call our office at any time, and staff will go over the funds with you. Why would you do this? Statistics tell us that people are not saving enough for retirement. Survey respondents indicated that 60 percent of them felt they were not saving enough. Even public employees, who have a pension plan, need to have personal savings along with the PERS plan and Social Security to ensure a financially sound retirement. We heard from many participants who said they didn’t even know about OSGP, and that they wish they would have gotten into the plan sooner.
Helping state employees save for retirement is the only reason we would have for opening this discussion. OSGP has nothing to gain from auto-enrollment and no outside entity is pushing this. Why are you promoting OSGP over some other investment? OSGP is the only employer-sponsored voluntary plan offered to state employees. The plan offers low fees and a diversified investment line-up. For example, the fees on the target date funds are only 10 basis points. Employees are free to choose whatever investment vehicle they want on their own, and many of our participants in the local government and education sector have several choices offered by their employers. I answered the questions assuming that a person could "opt-out" of continuing to contribute earnings at any time. Is that correct? Yes, it is. Even if an employee missed the 90-day window to opt out, he/she could stop contributing to the account at any time. When can we expect to be able to transfer 100% of our account to the Self-Directed Brokerage Option (SDBO)? OSGP and Treasury made the decision to allow a transfer of 50 percent of a participant’s OSGP account in to the SDBO. There is no possibility of allowing 100 percent of the account to be transferred, as you are still responsible for administrative fees, and so a portion would have to be available in the core funds to pay these fees. Treasury may consider allowing a larger percentage sometime in the future. Other investment options may also become available. Is this deduction pre-tax dollars? Yes, the plan is currently a pre-tax plan. However, in 2012, we will also offer a Roth, and the employee could choose whether they wanted pre-tax or after-tax dollars.
If your question wasn’t answered, or if you have any further comments or suggestions, send them to [email protected] keep your comments professional and related to auto-enrollment. OSGP staff will respond within two business days.
advisory cornerUpcoming Advisory Committee MeetingFebruary 8, 2012 • 9:30 a.m.
Archives Building
800 Summer Street NE, Suite 200 • Salem
FOURTH QUARTER
2011
Plan Information Line: (800) 365-8494 Plan website: http://osgp.ingplans.com
In this issueHigher 2012 contribution limits
A tax credit on contributions
OSGP surveys
Questions? Get answers your way
Update your beneficiary
OSGP open house: a highlight of National Save for Retirement Week
Higher 2012 contribution limitsMaximum Annual Contribution $17,000
Total including 50-Plus Catch-Up $22,500
Total including 457 Special Three-Year Catch-Up Up to $34,000
If you’re at least age 50, you are allowed to contribute an extra
$5,500 with the 50-Plus Catch-Up provision, for a total of up
to $22,500. And if you are within three years before the year
in which you will reach Normal Retirement Age as defined by
OSGP, you may be eligible to contribute up to $34,000 with
the 457 Special Three-Year Catch-Up. Since this catch-up option
takes into account your prior contributions, please call the
Salem office at (503) 378-3730 for assistance calculating theamount available to you.
Remember, even if you are eligible for both catch-up options
in the same year, IRS rules provide that you cannot use both in
the same year.
To find out more about these options or to change your
contribution level, go to http://osgp.ingplans.com to log into
your account and select Contributions, then Change Contributions.Or call the Plan Information Line at (800) 365-8494.
A tax credit on contributionsYou may be eligible to claim a tax credit on your 2011 and 2012
federal tax returns for up to half of the first $2,000 you save in
your OSGP account each year if your adjusted gross income
does not exceed these limits. Contact your tax adviser for more
information.
Tax years2011 2012
Single, married filing separately, $28,250 $28,750
or qualifying widow(er)
Head of household $42,375 $43,125
Married filing jointly $56,500 $57,500
OSGP surveys Summaries of the financial advice and automatic enrollment surveys
can be found at www.oregon.gov/pers/osgp under Resources. These informal surveys obtained input from participants and state employees
on two important topics. Financial advice will be discussed at the next
OSGP Advisory Committee meeting on February 8, 2012.
Questions? Get answers your wayThe Plan website includes a new feature that gives you the choice
of getting answers via e-delivery or by telephone when you call
(800) 365-8494. With e-delivery responses, you will receive an e-mail alerting you that the response is ready. To access your
response, log into your OSGP account at http://osgp.ingplans.comand go to the Correspondence folder in My Mailbox. If you have follow-up questions, contact the Plan Information Line at the number
provided in the response.
Update your beneficiaryIt is important to keep your beneficiary form up to date. If you
choose the standard designation, your account would go first to
your spouse, then to your child or children, then to your parents,
your siblings, and, finally, to your estate.
When you designate beneficiaries, consider naming both the primary
and contingent beneficiaries who would receive your OSGP account
benefits in the event of your death.
Your primary beneficiary is the person or persons designated as the first to receive the proceeds of your account upon your death.
The contingent beneficiary receives the benefit only if the primarybeneficiaries die before you.
Be sure to update your beneficiary in the event of a divorce,
marriage, or birth of a child. To update your beneficiary information:
• Download the Beneficiary Designation Form at
http://osgp.ingplans.com or call (800) 365-8494to request the form.
• Complete and return the Beneficiary Designation Form to OSGP, 800 Summer Street NE, Suite 200, Salem, OR 97301.
To review your current beneficiary form, you will need to submit a
written request to OSGP. Because this can be time-consuming, it
is easier to simply complete a new form since the information you
provide will override any previous beneficiary form you have on file
at OSGP.
Kathy Gannon
from OSGP, who
was featured in
the poster at
left, greets
a participant.
SKU#OR4Q11
OSGP website:http://osgp.ingplans.com
OSGP Information Line:(800) 365-8494
PERS/OSGP website:www.oregon.gov/PERS/OSGP
Editorial contributions: Gay Lynn Bath, OSGPDavid Crosley, PERSMarcy Loomis, ING
This newsletter is not intended to provide legal, tax, or investmentadvice. For such advice, participants should contact their legal, tax,or investment advisers.
© 2011 ING. All Rights Reserved.
SAVINGS GROWTH PLAN
quarterly calendarTransactions made on these dates when theNew York Stock Exchange is closed will beprocessed the following business day.
• Monday, February 20, 2012• Friday, April 6, 2012
*
OSGP open house: a highlight of National Save for Retirement Week Photos by Nancy Hill
Open house participants review OSGP materials.
OSGP held its sixth annual open house Wednesday, October 19, 2011, in theArchives Building in Salem to celebrate National Save for Retirement Week.
OSGP staff members and representatives from BlackRock, Charles Schwab, Dwight, and
ING were available to talk to participants and answer questions. PERS Executive Director
Paul Cleary and Fiscal Services Division Administrator Jon DuFrene were available for
questions, as well as Treasury’s Mike Viteri. Over 140 employees participated in the
workshops held during the week. Kathy Gannon from OSGP assisted participants
nearing retirement.
The OSGP team, left to right (front
row): Denise Helms, Sandy Newm
an,
Karen Blanton, Gay Lynn Bath, and
Tamie Cannon of OSGP. (Back row)
:
Doug Pederson, Kathy Gannon of O
SGP, Justin Naegle of ING, and
Jack Schafroth of OSGP.
Mike Viteri
from Treasury
talks with
Sharon Hoppel
from Dwight.
Karen Blantonhelps a participantwith paperwork.
Robert Jesch fromCharles Schwab answers a participant’squestions.
OSGP staff is available to answer y
our questions about the
Plan when you call the Salem office
at (503) 378-3730.
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
% Equity Assets$ Equity AssetsTicker SymbolsTop 10 Equity HoldingsSCH ST US TRSR ETF SCHO $202,160 33.12
SCHW US LCAP GRO ETF SCHG $90,016 14.75
SPDR GOLD TRUST GLD $30,550 5.01
SECTOR SPDR ENGY SELECT SHARES XLE $27,708 4.54
PROSHS ULTRASHRT OIL NEWOIL & DUG $23,067 3.78
VANGUARD DIV APPRCIATION VIG $19,128 3.13
ISHARES MSCI EMRG MKT FDWITH S EEM $18,970 3.11
ISHARES OIL & GAS EXPL IEO $18,426 3.02
ETFS GOLD TRUST ETF SGOL $15,493 2.54
DIREXION SHS ETF NEW BGZ $14,765 2.42
Top 10 Mutual Fund Holdings Ticker Symbols $ MF Assets % MF AssetsCOLUMBIA ACORN FUND ACRNX $53,132 18.09
VANGUARD WELLESLEY VWINX $50,971 17.35
VANGUARD GNMA FUND VFIIX $49,559 16.87
JANUS TRITON FD CL T JATTX $23,479 7.99
SCOUT MID CAP FD UMBMX $19,479 6.63
DRIEHAUS EMERGING MRKTS GROWTH DREGX $18,103 6.16
FEDERATED PRUDENT BEAR BEARX $13,603 4.63
JPMORGAN LARGE CAP GWTH CL A OLGAX $9,888 3.37
MATTHEWS ASIA DIVIDEND MAPIX $9,655 3.29
PERMANENT PORTFOLIO PRPFX $6,184 2.11
Money Market Fund Balance Ticker Symbols Total Value
SCHWAB MONEY MARKET FUND SWMXX $693,628
Oregon Savings GrowthCompany Name
Total PCRA Assets
Total PCRA Accounts
$1,616,882
30
Total Advisor Managed PCRA Assets
Total Advisor Managed PCRA Accounts
$0
0
Plan Profile Information
PCRA Accounts Opened This Quarter
PCRA Assets In and Out This Quarter*
Average PCRA Account Balance $53,896
$1,111,429
36
Cash & Equivalents 1.1
Equities 1.2
Mutual Funds 0.9
3.2Total
Equities 3.0
Mutual Funds 1.8
4.8Total
Average Positions (Per Acct) Average Trades (Per Acct)
* Assets In and Out includes contributions and distributions
Top 10 Mutual Funds % does not include Money Market Funds.
PCRA Participant Profile Information
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
44%
Cash &Equivalents
38%Equities
18%Mutual Funds
12/31/2011
78%
Cash &Equivalents
16%Equities
6%Mutual Funds
09/30/2011
Market Value Allocation - Asset Classes
(Quarter over Quarter)
This chart illustrates the percent of PCRA participant assets in each noted asset class as percentage of total PCRA assets. Percentages are calculated as of month-end.
Money market mutual funds are classified under Cash & Equivalents.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
12/31/2011
95%ETFs
5%Mutual Funds
Market Value Allocation - Equity Sectors
09/30/2011
96%ETFs
4%Mutual Funds
This chart illustrates the percent of PCRA participant assets in each equity sector, as classified by Standard & Poor's, as a percentage of total PCRA assets within equity
securities. Percentages are calculated as of month-end.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
Market Value Allocation - Mutual Funds
19%Hybrid Funds
10%International
6%
Large CapStock Funds
33%
Small CapStock Funds
13%
SpecializedFunds
18%
TaxableBond Funds
12/31/2011
33%International
67%
Small CapStock Funds
09/30/2011
This chart illustrates the percent of PCRA participant assets in each mutual fund category, as classified by Morningstar Inc., as a percentage of total PCRA long-term
mutual fund assets. Percentages are calculated as of month-end. Small cap funds are subject to greater volatility than those in other asset categories. International
investments are subject to additional risks such as currency fluctuation, political instability and the potential for illiquid markets. Since sector funds focus investments on
companies involved in a particular sector, the funds may involve a greater degree of risk than an investment in other mutual funds with greater diversification. All data is for
informational purposes only.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
0% 10% 20% 30% 40% 50% 60% 70%
Equities
Mutual Funds
66.3%
33.7%
Net Asset Flow - Asset Class
(3-month period ending 12/31/2011)
The chart illustrates the percent of total net flows within each asset class over the last three-month period. Net flow percentages are calculated by adding the purchases and
sales amounts within each respective asset class and dividing by the total net flows over the period. All data is for informational purposes only.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
0% 10% 20% 30% 40% 50% 60% 70%
Equities-ETFs
MF-Small Cap Stock Funds
MF-Hybrid Funds
MF-Taxable Bond Funds
MF-Specialized Funds
Equities-Mutual Funds
MF-International
MF-Large Cap Stock Funds
62.6%
9.2%
7.0%
6.6%
6.0%
3.7%
2.6%
2.2%
Net Asset Flow - All Investment Categories
(3-month period ending 12/31/2011)
The chart illustrates the percent of total net flows within each investment category, as classified by Standard & Poor's and Morningstar Inc., over the last three-month
period. Net flow percentages are calculated by adding the purchases and sales amounts within each respective investment category and dividing by the total net flows over
the period. Data is for informational purposes only.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
10/31/2011 11/30/2011 12/31/2011
Equities
Mutual Funds
Avg
Tra
des p
er
Acco
un
t
Average Monthly Trades Per Account
(3-month period ending 12/31/2011)
This chart illustrates the trades per account in each noted asset class over the last three-month period. Data is for informational purposes only.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
The Schwab Self-Directed Brokerage Account Quarterly Report
For the Oregon Savings Growth Plan as of 12/31/2011
0%
20%
40%
60%
80%
100%
10/31/2011 11/30/2011 12/31/2011
100.00% 100.00% 100.00%
Web (Schwab.com)
Trading Channel Mix
(Month over Month)
This chart illustrates the trading channel participants used to place trade orders over the last three-month period. Data is for informational purposes only.
2008 Charles Schwab & Co., Inc. (Member SIPC). All rights reserved. (0802-10162)
DEFERRED COMPENSATION GOALS FOR 2011
The program will focus on two main goals in 2011. These goals and their associated strategies will allow for the expected growth of the program, improve administrative efficiency, lower administrative fees, and increased staff skills to support the program and provide excellent customer service to participants. Goal 1: Increase participation in the plan. Status Strategy Due date Responsible leader Q4 Status Increase EE Workshop attendance by 5% over 2010 2010: 2441 1st Quarter: 677 2nd Quarter: 460 3rd Quarter: 462 4th Quarter: 476
• Update workshop mailer/flyer
• Utilize new enrollment process by sending email reminder, invitation to invite a friend.
• Create payroll stuffers for paychecks and direct deposits
• Advertise workshops and seminars on ilearnoregon.
• Pre-call state agencies two weeks before workshops are scheduled
Ongoing Ongoing
Karen Blanton
Participate in outlying benefit fairs. Updated flyer and sent announcements to agencies 2 weeks before meetings. Initiated local government participation in monthly workshop sessions. Call HR managers, and on outlying trips do drop bys the day before scheduled meetings.
Keep new enrollments from “OSGP Highlights” workshop attendees above 65% 1st Quarter: 67 2nd Quarter: 65 3rd Quarter: 67 4th Quarter: 68
• Hold “enrollment workshop” at 11:00a on day of open workshops.
• Postcard/email attendees that haven’t enrolled.
Ongoing Ongoing
Karen Blanton Used I link registration to e mail attendees that didn’t attend meetings to encourage participation in alternative workshops.
1
DEFERRED COMPENSATION GOALS FOR 2011
Goal 1: Increase participation in the plan. Deliverable Strategy Due date Responsible leader Q4 Status Increase the number of worksite/Brown Bag presentations hold at status quo 2010. 2010: 169 1st Quarter: 35 2nd Quarter: 48 3rd Quarter: 35 4th Quarter: 42
• Promote these presentations in Perspective, the Plan Update, on websites and in the workshops.
• Direct mail all agencies under 50 employees with list of “Brown Bag” workshops.
Ongoing
Karen Blanton Developed e mail piece to promote on site presentations and stimulate participation. Drop in on agencies with promotional material. Promote on site brown bag workshops at regular scheduled OSGP workshops.
Increase Participation for state agencies by 2% 2010: 29.7% 1st Quarter: 29.7 2nd Quarter: 28.7 3rd Quarter: 28.1 4th Quarter: 28.7
• Review each agency/commission participation quarterly and look for opportunities to do new employee orientation/training with HR.
• Develop targeted mailings for those agencies with low participation. (new hire, under 30, age 40 – 50, etc.)
• Use pay stub messages to draw attention to OSGP
Ongoing
Karen Blanton
Initiated on site mini workshops to introduce topics such as investment overviews, dollar cost averaging, market timing, managing your account on line, saving strategies and Charles Schwab brokerage information. Promoted booths and break out sessions at regional state conferences.
Enhance Plan Communications forms/flyers/documents
Mail “Communication packet” to all commissions and agency addresses outside of Salem and Portland
Karen Blanton Flyers and announcements sent through PERS mailing system.
2
DEFERRED COMPENSATION GOALS FOR 2011 Goal 2: Increase the assets in the plan. Deliverable Strategy Due date Responsible leader Q4 Status Increase average monthly deferrals from OSPS by 5% Dec 2010: $ 365 1st Quarter: $419 2nd Quarter: $389 3rd Quarter: $386 4th Quarter: $390
• Target mailings to age 50 plus individuals highlighting tax-deferred saving
• Educate on Pay stub flyer-Give examples of savings potential-give examples of where dollars can be found.
• At workshops, advise participants to use a percent of pay rather than a dollar amount.
• Develop new DHS training seminar on the Retirement topic
Ongoing
Karen Blanton Implemented new DHS training seminar on Retirement. Emphasizing catch up provisions, final paycheck and IAP rollovers Developing new DHS training seminar, Managing your account, and rotating topics.
Increase enrollments from Higher Education by 30% 2010: 43 1st Quarter: 19 2nd Quarter: 14 3rd Quarter: 15 4th Quarter: 13
• Have a booth a OSU benefit fairs.(these will be held in March)
• Marketing campaign with OSU, targeting employees max out 403(b).
• Hold workshops on all campuses
• Direct Mail Participants-schedule One on One
Ongoing Ongoing
Karen Blanton Set up booths at all benefit fairs, held workshops and one on ones on campus. Collaborated with HR directors, promoting open invitation to ongoing events.
3
DEFERRED COMPENSATION GOALS FOR 2011
Goal 2: Increase the assets in the plan. Deliverable Strategy Due date Responsible leader Q4 Status Complete 450 rollovers into the plan. 2010: 443 1st Quarter: 136 2nd Quarter: 171 3rd Quarter: 169 4th Quarter: 169
• Q2 article on IAP Account-Rollover in Form
• Target Mailer all new state employees with letter and Rollover in form
• Q3 article in Perspective on “benefits of consolidation”
Ongoing
Karen Blanton/Kathy Gannon/ Gay Lynn Bath/Citistreet Karen Blanton Karen Blanton
Promotion of benefits of consolidation at each workshop. Emphasize low fees, flexibility. Email to new state employees. Worked with PERS workshop counselors to promote IAP rollovers to OSGP.
Reduce Rollouts by 5% from 2010 numbers 2010: 368 1st Quarter: 109 2nd Quarter: 126 3rd Quarter: 116 4th Quarter: 111
• Q2 article on selecting an investment manager
• Direct Mail participants who submit retirement papers explaining options, invite to workshop
Ongoing
Karen Blanton Emphasize the benefits of leaving money in plan, at workshops. Ongoing
4
Employer groups participating: Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011
Counties 8 8 7 8 9Cities 40 43 45 47 49Special districts 64 67 71 76 82School districts 66 69 70 76 83
Total employers participating: 178 187 193 207 223
Total employees participating: 2654 2969 3049 3224 3422
Total eligible employees: 45,270 46,854 44,614 47,242 49,440Percent participating: 6% 6% 7% 6.8% 6.9%
Average monthly deferrals made: $877,131 $892,377 $851,485 $907,493 $945,846
Total local government assets: $61,069,624 $52,941,772 $72,949,423 $92,839,969 $103,027,651
Local Government Program Status
Page 1
Local Government Program Status
OREGON SAVINGS GROWTH PLAN
Total Employers Participating:
0
50
100
150
200
250
2007 2008 2009 2010 2011
Total Employees Participating:
0
1000
2000
3000
4000
2007 2008 2009 2010 2011
Total Eligible Employees :
42,000
44,000
46,000
48,000
50,000
2007 2008 2009 2010 2011
Page 2
OREGON SAVINGS GROWTH PLAN
Local Government Program Status
Total Monthly Deferrals Made:
$800,000
$850,000
$900,000
$950,000
$1,000,000
2007 2008 2009 2010 2011
Total Local Government Assets:
$0$20,000,000$40,000,000$60,000,000$80,000,000
$100,000,000$120,000,000
2007 2008 2009 2010 2011
Page 3
New Employer Adoption:
BLUE MOUNTAIN COMMUNITY COLLEGELANE COUNTY ESD
ODELL SANITARY DISTRICTCITY OF KEIZERCITY OF LEBANONTILLAMOOK SCHOOL DISTRICTCITY OF SCIONORTH WASCO LIBRARY DISTRICTJUNCTION CITY SCHOOL DISTRICTCITY OF TIGARDCLATSKANIE UTILITY DISTRICTVENETA SCHOOL DISTRICTMYRTLE CREEK SCHOOL DISTRICT
Professional Organization Attendance as VendorsNONE
Educational OutreachSUMMARY OF EMPLOYER / EMPLOYEE CONTACTS
WORKSHOP 1 13WORKSHOP 2 5RETIREMENT WKSP 0
20BENEFITS FAIR 3SITE VISIT 75VENDOR FAIR 0EMPLOYER VISITS 8
124
Local Government Report 2011 - 4th Quarter Review
Adoptions in Progress:
BROWN BAGS
TOTAL CONTACTS
Page 4
Participating Local Government Employers
ORS 243.474 authorizes the state to offer its 457 deferred compensation program to all Oregon public employers including special districts, local governments, and school districts. The Oregon Savings Growth Plan (the deferred compensation program) has only recently been made available to public employees other than state employees. Employers interested in participating in our program must follow these steps:
• Establish an eligible 457 deferred compensation plan. This program must meet all the requirements of IRC 457.
• Adopt a resolution authorizing the Oregon Savings Growth Plan to be offered as one of the investment providers for your 457 program.
• Enter into an agreement with PERS for the administrative services provided to all participating employers.
For more information or to receive an adoption packet, please call (503) 378-8567. We look forward to discussing how this plan can help meet your employer and employee needs to better plan for successful retirements. Since it was made available to all public employers, the following employers have chosen to participate in the Oregon Savings Growth Plan. Eligible employees of these public employers can obtain information about the plan by calling 503-378-8567 and requesting an enrollment kit. The employers are: Counties Cities Community Colleges School Districts/ESD Special Districts
Baker Banks Central Oregon Community College A.C.E. Academy Applegate Fire Dist.
Clatsop Canyonville Chemeketa Community College Albany SD Aumsville RFPD
Coos Carlton Columbia Gorge Community College Amity SD Aurora RFPD
Douglas Clatskanie Mt. Hood Community College Baker County SD Baker County Library
District
Lake Coburg Portland Community College Banks SD Black Butte Police
Dept.
Marion Coos Bay Southwestern Oregon Community College Bend/La Pine SD Black Butte RFPD
Counties Cities Community Colleges School Districts/ESD Special Districts Polk Cottage Grove Umpqua Community
College Blue Mountain Community College Canby Utility
Umatilla Dayton Oregon CC Association Cascade SD COIC
Yamhill Depoe Bay Clackamas Community College Centennial SD Clackamas County
Housing Authority
Drain Central Curry SD Clackamas County Fire District
Dufur Corvallis SD Clackamas County Soil and Water
Durham David Douglas SD Clackamas River Water
Elkton Dayton Public Schools Clatskanie RFPD
Gearhart Douglas County SD Columbia 911 Comm. District
Grants Pass Douglas ESD Depoe Bay RFPD
Halsey Echo School District Community Services Const.
Harrisburg Elgin SD Crook County RFPD
Hermiston Falls City SD Curry Public Library District
Hillsboro Forest Grove SD Deschutes County RFPD
Hubbard Gladstone SD Deschutes Valley Water District
Independence Glendale SD Estacada RFPD
Irrigon Grants Pass School District Green Sanitary District
Joseph Gresham-Barlow School District
Harney District Hospital
Junction City High Desert ESD Hermiston Fire and Rescue
Lafayette Harrisburg SD Hubbard RFPD
Lake Oswego Hermiston SD Ice Fountain Water District
Lincoln City Hood River County SD Jefferson Parks & Rec District
Lowell Ione SD Juntura Rural Road District
Madras Jefferson SD Lane Council of Governments
Milwaukie Kings Valley Charter Lane County Fire District 1
Molalla Knappa SD Lebanon Fire District
North Plains La Grande SD Linn-Benton Housing Authority
Nyssa Lake County ESD Marion County H.A.
Counties Cities Community Colleges School Districts/ESD Special Districts Oakridge Lake Oswego SD McKenzie Fire and
Rescue
Pendleton Lane County ESD McMinnville Water and Light
Pilot Rock Lincoln County SD METRO
Rainier Linn-Benton-Lincoln ESD Mist-Birkenfeld RFPD
Rogue River Long Creek SD NWSDS
Sandy Malheur ESD Nestucca RFPD
Sisters Malheur County SD North Bend Coos/Curry H.A.
Springfield McMinnville SD North Lincoln Fire & Rescue
Stayton Morrow County SD North Wasco Park & Rec.
St. Helens Multnomah ESD Oregon Consortium
Talent North Bend SD Oregon Health Insurance Exchange
Veneta Northwest Regional ESD Oregon School Boards Assoc.
Waldport Ontario SD Philomath Fire and Rescue
Oregon City SD Polk County Fire District
Oregon Trail SD Port of Astoria
Pendleton SD Port of Garibaldi
Phoenix/Talent S.D. Port of Hood River
Pilot Rock SD Port of Newport
Port Orford/Langlois SD Port of St. Helens
Redmond SD Rainbow Water District
Roseburg SD #4 Redmond Fire & Rescue
Salem-Keizer SD R.O.C.N. Task Force
Scio SD Sandy Fire District
Silver Falls SD Scappoose Rural Fire
South Coast ESD Silverton Fire District
South Lane School Dist. Sisters Camp Sherman Fire
Southwestern Oregon Community College Siuslaw Library Dist.
Counties Cities Community Colleges School Districts/ESD Special Districts Stanfield School District Suburban East Salem
Water District
Sutherlin SD SW Lincoln County Water District
Sweet Home SD Stayton RFPD
Umatilla/Morrow ESD Sunrise Water Authority
Wallowa ESD Talant Urban Renewal District
Wallowa School District Tillamook 911 Dist.
Warrenton/Hammond SD Tualatin Valley Irrigation District
West Linn Wilsonville SD TVF&R
Willamette ESD Tualatin Valley Water District
Winston-Dillard SD Umatilla Co Soil & Water
Yamhill/Carlton SD Umpqua Regional Council of Gov.
Wash County Fire District
Water Wonderland Improvement District
West Multnomah Soil and Water Conservation Dist.
West Slope Water District
Westland Irrigation Dist.
Winchester Bay Sanitary District
Winston-Dillard RFPD
Winston-Dillard Water District
2011 4th Quarter and Year to Date Over All Program Stats
MONTH Oct Nov Dec Quarter Total2011 Year to Date Totals
2010 Year to Date Totals
Percentage Difference
Monthly Contribution Totals (Month of deposit to participant account)
OSPS $4,263,671.52 $4,175,901.30 $4,228,069.92 $12,667,642.74 $51,057,525.58 $50,385,229.62 1.3%Higher Ed $366,005.66 $372,360.87 $363,457.20 $1,101,823.73 $4,557,270.82 $4,526,940.97 0.7%Misc. Agencies $161,692.68 $160,700.72 $162,832.50 $485,225.90 $1,834,069.69 $1,709,435.78 7.3%Local Governments $852,980.83 $946,463.49 $1,038,096.06 $2,837,540.38 $10,961,421.49 $10,112,076.09 8.4%Total Monthly Contributions $5,644,350.69 $5,655,426.38 $5,792,455.68 $17,092,232.75 $68,410,287.58 $66,733,682.46 2.5%
New Enrollments (Month of deposit to participant account)
New Participants - OSPS 76 54 70 200 802 753 6.5%New Participants - Higher Ed 2 4 6 12 60 43 39.5%New Participants - Misc. Agencies 1 3 3 7 34 10 240.0%New Participants - Local Gov 26 24 25 75 341 245 39.2%Total New Participants 105 85 104 294 1237 1051 17.7%
Eligible Employees Dec-11OSPS 38,127 38,590 37,996 39,248 -3.2%Higher Ed 14,654 14,654 15,060 13,693 10.0%Misc. Agencies 577 582 583 568 2.6%Local Governments 48,724 49,051 49,440 47,242 4.7%Total Eigible Employees 102,082 102,877 103,079 100,751 2.3%
1
2011 4th Quarter and Year to Date Over All Program StatsMONTH Oct Nov Dec
Total Participants (anyone with an account
balance employed or terminated) Dec-11
OSPS 18,285 18,262 18,283 18,301 -0.1%Higher Ed 875 875 876 856 2.3%Misc. Agencies 376 379 379 359 5.6%Local Governments 3,394 3,402 3,422 3,224 6.1%locations(benef/alternates/sub 321 316 316 335 -5.7%Total Participating Employees 23,251 23,234 23,276 23,075 0.9%
Total Active Employees (Contributing/Non-
Contributing) Dec-11OSPS 13,766 13,703 13,710 13,873 -1.2%Higher Ed 745 746 748 728 2.7%Misc. Agencies 281 284 284 261 8.8%Local Governments 3,169 3,169 3,184 3,040 4.7%Total 17,961 17,902 17,926 17,902 0.1%
Total Active Contributing Employees
(as of month posted to account) Dec-11OSPS 10,992 10,912 10,894 11,665 -6.6%Higher Ed 453 469 460 448 2.7%Misc. Agencies 237 238 236 217 8.8%Local Governments 2,124 2,122 2,131 2,632 -19.0%Total Participating Employees 13,806 13,741 13,721 14,962 -8.3%
2
2011 4th Quarter and Year to Date Over All Program StatsMONTH Oct Nov Dec Quarter Total
2011 Year to Date Totals
2010 Year to Date Totals
Percentage Difference
Number of New Loan Issued (as of month loan requested)
OSPS 33 27 19 79 383 418 -8.4%Higher Ed 0 0 0 0 3 3 0.0%Misc. Agencies 0 1 0 1 5 7 -28.6%Local Governments 1 0 0 1 11 9 22.2%Total 34 28 19 81 402 437 -8.0%
New Loans Issued Total Dollars(as of month of loan
request)OSPS $248,380.44 $186,513.96 $183,061.32 $617,955.72 $2,944,356.47 $3,385,635.59 -13.0%Higher Ed $0.00 $0.00 $0.00 $0.00 $53,769.46 $113,105.22 -52.5%Misc. Agencies $0.00 $1,750.00 $0.00 $1,750.00 $97,272.63 $166,554.83 -41.6%Local Governments $3,514.94 $0.00 $0.00 $3,514.94 $101,019.12 $67,616.56 49.4%Total $251,895.38 $188,263.96 $183,061.32 $623,220.66 $3,196,417.68 $3,732,912.20 -14.4%
Loan Program Total Payments(as of month posted
to account)OSPS $220,009.11 $222,139.63 $224,240.17 $666,388.91 $2,504,254.99 $1,980,021.68 26.5%Higher Ed $3,620.17 $2,782.68 $2,782.68 $9,185.53 $26,355.28 $18,875.52 39.6%Misc. Agencies $6,470.44 $6,470.44 $6,470.44 $19,411.32 $70,406.71 $48,796.33 44.3%Local Governments $4,429.75 $4,201.12 $6,163.48 $14,794.35 $46,818.05 $28,754.29 62.8%Loan Pay Off $15,784.01 $47,373.02 $62,788.30 $125,945.33 $297,181.54 $185,034.04 60.6%Total $250,313.48 $282,966.89 $302,445.07 $835,725.44 $2,945,016.57 $2,261,481.86 30.2%
3
2011 4th Quarter and Year to Date Over All Program Stats
MONTH Oct Nov Dec Quarter Total2011 Year to Date Totals
2010 Year to Date Totals
Percentage Difference
Unforeseeable Emergency Withdrawals
Requests 10 12 9 31 116 116 0.0%Approved 9 11 8 28 103 95 8.4%Denied 1 1 0 2 7 12 -41.7%Request Withdrawn 0 0 1 1 6 9 -33.3%With loans 5 6 3 14 51 52 -1.9%Without loans 5 6 6 17 65 64 1.6%Dollars Withdrawn $39,655.82 $41,459.58 $57,227.84 $138,343.24 $541,932.83 $292,677.65 85.2%
Number Rollover/TransfersState Rollover/Transfers In 72 45 52 169 647 443 46.0%Local Gov Rollover/Transfers In 36 18 19 73 252 184 37.0%Total Rollover/Transfer In 108 63 71 242 899 627 43.4%State Rollover/Transfers Out 29 41 41 111 467 368 26.9%Local Gov Rollover/Transfers Out 8 10 10 28 84 62 35.5%Total Rollover/Transfer Out 37 51 51 139 551 430 28.1%
Prior Service Time Purchase 18 15 9 42 68
Rollover/Transfers DollarsState Rollover/Transfers In $2,178,285.88 $1,138,545.79 $2,074,393.90 $5,391,225.57 $20,294,021.04 $11,735,318.77 72.9%Local Gov Rollover/Transfers In $775,883.20 $254,766.51 $585,592.49 $1,616,242.20 $5,394,529.08 $1,860,991.75 189.9%Total Rollover/Transfer In $2,954,187.08 $1,393,327.30 $2,659,995.39 $7,007,509.77 $25,688,550.12 $13,596,310.52 88.9%
State Rollover/Transfers Out $2,188,456.45 $2,056,043.34 $2,056,043.34 $6,300,543.13 $32,837,371.72 $23,827,309.82 37.8%Local Gov Rollover/Transfers Out $263,131.45 $236,204.75 $236,204.75 $735,540.95 $3,655,593.73 $1,893,129.47 93.1%Total Rollover/Transfer Out $2,451,587.90 $2,292,248.09 $2,292,248.09 $7,036,084.08 $36,492,965.45 $25,720,439.29 41.9%
Prior Service Time Purchase $263,192.93 $240,490.66 $178,994.21 $682,677.80 $1,281,594.64
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2011 4th Quarter and Year to Date Over All Program Stats
MONTH Oct Nov Dec Quarter Total2011 Year to Date Totals
2010 Year to Date Totals
Percentage Difference
Special Programs (as of month posted to account)Max Plus 0 0 2 2 46 69 -33.3%Catch-Up 50+ 3 5 0 8 92 111 -17.1%Catch-Up 3 YR 3 0 6 9 40 26 53.8%Final Paycheck Deferral 6 12 4 22 118 69 71.0%Temporary Employees 2 1 1 4 42 32 31.3%
Terminated Participants (from ING data base)
62 51 75 188 599 426 40.6%
Settlement Agreements Processed
72 65 67 204 761 619 22.9%
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