global perspectives may

7/31/2019 Global Perspectives MAY

1/90

May 2012for the period ended 4/30/12

INGGlobal Perspectives

Markets. Insights. Opportunities.


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xper ana ys s a ma es sense o comp ex mar e s.

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GLOBAL PERSPECTIVES


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Table of Contents

Overview

Strategic Overview 1

Economy

Consumer Trends, Confidence 46-47ews ea nes 2

Global Capital Market Returns 3

Equity

-

ea ng & urrent us ness n cators 48-51Employment and Unemployment 52-53GDP 54Inflation 55Housin 56-57. .

Valuation 9-10Fundamentals 11-16Volatility 17

Federal Budget, Debt, Deficits, Funding 58-60Corporate Tax Rates 61Commodities, Oil, U.S. Trade 62-65

xe ncome

Bond and Loan Returns 18Yield Curves 19Global Yields 20

Asset Allocation

Correlation Matrix 66Fund Flows 67Alternative Investment Returns 68

. . -Municipal, Credit and Mortgage Spreads 23-25Fixed Income Strategy 26-33

International

ong-term ap ta ar et esu ts 69Diversification & Allocation Strategy 70-74

Retirement

Global Returns 34-37Major Currencies 38International Economics 39Global Stock Fundamentals 40

Index Definitions / Important Disclosures 85-87

Investment-Related Retirement Trends 75-84

GLOBAL PERSPECTIVES

a a are e mos recen y ava a e as o un essindicated otherwise. Please refer to the Index Definitions.

World and Emerging Markets 41-42Euro Zone, Frontier Mkts, China Hard Landing 43-45


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Strategic Overview

Fundamentals Slide Comment

Global Capital Market 3 Returns for a globally diversified strategy over the last 10 years refute the notionReturns of a lost decade.

Advancing CorporateProfits

12 Consistent earnings growth is the cornerstone of an improving investment climate.

Broadenin 49-50 U.S. manufacturin ca acit utilization is nearin historicall normal levels whileManufacturing

the ISM index has expanded for 33 consecutive months.

Consumer Strength 46 Personal consumption and income are at all-time highs; retail sales are rising fast.

Developing 41 World GDP grew steadily through the great recession supported by the largestEconomies emerging markets, which now out-produce the largest developed economies.

Global Risks

U.S. Debt and Deficit 59 Total federal debt exceeds 90% of GDP, and the deficit is about 9% of GDP (without. .

Euro zone Debt 43 The alarming debt levels of PIIGS countries may be containable by the fence beingput in place, but obstacles and pitfalls remain.

China Hard Landing 45 Chinas soaring state investments, property bubble and declining exports raiseques ons a ou e pro a y o a so an ng.

Commodities Bubble 62 Gold prices exemplify the risk of a potential collapse in commodities prices.

GLOBAL PERSPECTIVES

1


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April News Headlines

April 2: ISM reports 32nd consecutive month of expansion in the U.S. manufacturing sector

April 3: March auto sales leap 13% over year-ago results

April 6: Nonfarm payrolls disappoint, but unemployment rate ticks down to 8.2%

April 10: Santorum suspends presidential campaign, all but guaranteeing Romney the nomination

April 13: Widely condemned North Korean rocket launch fails

. ,

April 13: Consumer prices rise 2.7% in March from a year ago, above the 2% long-term Fed target

April 16: Retail sales rise again in March despite high gasoline prices

,

April 24: U.K. GDP contracts again in the first quarter, as it slips back into recession

April 25: U.S. durable goods orders fall at the largest rate in three years

-

April 27: At 2.2%, U.S. GDP growth disappoints in the first quarter

GLOBAL PERSPECTIVES

2

Overview


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Index W t A r-12 YTD 2011 2010 2009 2008 2007 1 ear 3 ears 5 ears 10 ears

Global Perspectives Model AllocationReturns for a globally diversified strategy over the last 10 years refute the notion of a lost decade.

Equity

S&P 500 10% (0.6) 11.9 2.1 15.1 26.5 (37.0) 5.5 4.8 19.5 1.0 4.7

S&P Midcap 10% (0.2) 13.2 (1.7) 26.6 37.4 (36.2) 8.0 (0.9) 22.7 4.1 7.7

S&P Smallcap 10% (1.3) 10.6 1.0 26.3 25.6 (31.1) (0.3) 1.1 22.0 2.9 7.1

Global REITs 10% 2.8 13.4 7.3 27.6 27.8 (37.8) (17.8) 8.5 30.2 (0.2) 10.2

EAFE 10% (1.8) 8.9 (11.7) 8.2 32.5 (43.1) 11.6 (12.4) 12.3 (4.3) 5.9

merg ng ts 10% . . . . . . . . . . .

Average (0.5) 11.6 (4.3) 18.9 40.5 (40.8) 11.0 (2.6) 20.2 1.1 8.8

Fixed Income

10% . . . . . . . . . . .

U.S. Treasury 20+ 10% 4.7 (2.4) 33.8 9.4 (21.4) 33.7 10.2 30.2 10.6 10.3 8.7

Global Aggregate10%

1.2 2.1 5.6 5.5 6.9 4.8 9.5 3.3 7.6 6.4 7.1High Yield 10% 1.0 6.4 5.0 15.1 58.2 (26.2) 1.9 5.9 19.7 8.0 9.2

Average 2.1 2.4 13.2 9.8 15.6 1.9 6.5 12.1 12.6 7.9 7.9

60/40 Portfolio 0.5 7.9 2.7 15.3 30.6 (23.7) 9.2 3.3 17.2 3.8 8.5

GLOBAL PERSPECTIVES

3

Overview

e o a sset ocat on strategy s compr se o 10 asset c asses, equa y we g te : & 500, & 400 cap, & 600 ma cap, . . n ex,NA REIT Index, MSCI EAFE Index, MSCI BRIC Index, Barclays Capital U.S. Corporate Bonds, Barclays Capital U.S. Treasury Bonds, Barclays Capital GlobalAggregate Bonds, Barclays Capital U.S. High Yield Bonds. Source: FactSet and FTSE NAREIT Index.


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S&P 500After two bull and two bear market cycles, the S&P 500 is about 11% below its 2007 peak.

1,600

1,800

(11%)

S&P 500 (price only 15 years) S&P 500 (since 2007 peak)

1,200

1,400

(49%)

800

1,00024.2 106.6

...

600

10/09/07 11/20/08 1/06/09 3/09/09 10/09/0711/20/08 01/06/09 3/09/09 4/30/12 4/30/12

1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

4Source: Standard & Poors, FactSet

Equity


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Index Total ReturnsFlat to negative 2011 returns gave way to a remarkable 2012 rally as perceptions of global risk subsided.

Index Apr-12 YTD 2011 2010 2009 2008 2007 2006 2005 1 year 3 years 5 years 10 years

Broad Market

Dow Industrial 0.2 9.1 8.3 14.0 22.6 (31.8) 8.8 19.0 1.7 6.0 20.6 3.0 5.5

S&P 500 (0.6) 11.9 2.1 15.1 26.5 (37.0) 5.5 15.8 4.9 4.8 19.5 1.0 4.7

S&P 100 (OEX) (0.7) 12.1 3.2 12.5 22.3 (35.3) 6.1 18.5 1.2 6.9 18.8 1.0 4.1

Nasdaq Composite (1.4) 17.3 (0.8) 18.0 45.3 (40.0) 10.5 10.4 2.1 7.2 22.3 4.8 6.9

Large-Cap

Russell 1000 (0.6) 12.2 1.5 16.1 28.4 (37.6) 5.8 15.5 6.3 4.1 19.9 1.2 5.1

Russell 1000 Value (1.0) 10.0 0.4 15.5 19.7 (36.8) (0.2) 22.2 7.1 1.0 18.3 (1.7) 4.8Russell 1000 Growth (0.2) 14.5 2.6 16.7 37.2 (38.4) 11.8 9.1 5.3 7.3 21.4 4.1 5.2

Mid-Cap

Russell Mid-Ca 0.3 12.6 1.5 25.5 40.5 41.5 5.6 15.3 12.7 0.0 23.0 2.2 8.0

Russell Mid-Cap Value (0.7) 10.7 (1.4) 24.8 34.2 (38.4) (1.4) 20.2 12.6 (0.8) 22.4 0.5 8.0

Russell Mid-Cap Growth (0.0) 14.5 (1.7) 26.4 46.3 (44.3) 11.4 10.7 12.1 0.8 23.6 3.5 7.5

Small-Cap

. . . . . . . . . . . . .

Russell 2000 Value (1.4) 10.0 (5.5) 24.5 20.6 (28.9) (9.8) 23.5 4.7 (4.1) 18.8 (0.5) 6.1

Russell 2000 Growth (1.6) 11.4 (2.9) 29.1 34.5 (38.5) 7.0 13.3 4.2 (4.4) 21.8 3.3 6.1

GLOBAL PERSPECTIVES

5Note: All returns are total returns including dividends expressed as percentages. Returns for 3-, 5-, and 10-year periods are annualized.Source: Dow Jones, Standard & Poors, NASDAQ, Russell Investments, FactSet

Equity


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Sector Total ReturnsWide variations in sector returns have characterized markets buoyed by strong fundamentals and buffeted byglobal risks.

Sector Apr-12 YTD 2011 2010 2009 2008 2007 2006 2005 1 year 3 years 5 years 10 years

Consumer Discretionary 1.3 17.5 6.1 27.7 41.3 (33.5) (13.2) 18.6 (6.4) 14.5 27.3 5.0 5.7

Consumer Staples 0.3 5.9 14.0 14.1 14.9 (15.4) 14.2 14.4 3.6 11.8 19.6 7.7 6.5Energy (1.0) 2.9 4.7 20.5 13.8 (34.9) 34.4 24.2 31.4 (9.1) 16.8 3.8 11.6

Financials (2.4) 19.2 (17.1) 12.1 17.2 (55.3) (18.6) 19.2 6.4 (4.1) 14.3 (14.1) (3.0)

Health Care (0.2) 8.8 12.7 2.9 19.7 (22.8) 7.1 7.5 6.5 9.0 18.3 2.9 3.8

Industrials 1.1 10.1 0.6 26.7 20.9 39.9 12.0 13.3 2.3 2.0 21.6 1.3 5.3

Materials (0.9) 10.2 (9.8) 22.2 48.6 (45.7) 22.5 18.6 4.4 (6.9) 17.0 1.6 7.6

Information Technology (1.9) 19.2 2.4 10.2 61.7 (43.1) 16.3 8.4 1.0 14.6 23.0 6.6 6.3

Telecommunication 5.4 7.6 6.3 19.0 8.9 (30.5) 11.9 36.8 (5.6) 7.2 15.5 1.3 5.9

Utilities 1.8 0.2 20.0 5.5 11.9 (29.0) 19.4 21.0 16.8 12.4 16.5 1.1 6.3

S&P 500 (0.6) 11.9 2.1 15.1 26.5 (37.0) 5.5 15.8 4.9 4.8 19.5 1.0 4.7

GLOBAL PERSPECTIVES

6ote: returns are tota returns nc u ng v en s expresse as percentages. eturns or 3- an 5-year per o s are annua ze . ot er returns are

cumulative. Total returns are based on S&P GICS sectors.Source: Standard & Poors, FactSet

Equity


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Style Total ReturnsSmall- and mid-cap styles have led the market every calendar year except 2007 and 2011-2012.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Sm Val Mid Val Sm Gr Mid Val Mid Val Sm Val Lg Gr Sm Val Mid Gr Sm Gr Lg Gr Mid Gr

14.0% -9.6% 48.5% 23.7% 12.7% 23.5% 11.8% -28.9% 46.3% 29.1% 2.6% 14.5%

ValueSm Val Sm Val Sm Val Mid Gr Lg Val Mid Gr Lg Val Lg Gr Mid Gr Lg Val Lg Gr

2.3% -11.4% 46.0% 22.3% 12.1% 22.2% 11.4% -36.8% 37.2% 26.4% 0.4% 14.5%

Lg Val Lg Val Mid Gr Lg Val Lg Val Mid Val Sm Gr Lg Gr Sm Gr Mid Val Mid Val Sm Gr

- . - . . . . 20.2 . - . . . - . .

Sm Gr Mid Gr Mid Val Mid Gr Lg Gr Sm Gr Lg Val Mid Val Mid Val Sm Val Mid Gr Mid Val

-9.2% -27.4% 38.1% 15.5% 5.3% 13.3% -0.2% -38.4% 34.2% 24.5% -1.7% 10.7%

Mid Gr Lg Gr Lg Val Sm Gr Sm Val Mid Gr Mid Val Sm Gr Sm val Lg Gr Sm Gr Lg Val

-20.2% -27.9% 30.0% 14.3% 4.7% 10.7% -1.4% -38.5% 20.6% 16.7% -2.9% 10.0%

Lg Gr Sm Gr Lg Gr Lg Gr Sm Gr Lg Gr Sm Val Mid Gr Lg Val Lg Val Sm Val Sm Val

Indexes:Lg Val = Russell 1000 Value Lg Gr = Russell 1000 Growth Mid Val = Russell Mid Cap ValueMid Gr = Russell Mid Cap Growth Sm Val = Russell 2000 Value Sm Gr = Russell 2000 Growth

-20.4% -30.3% 29.8% 6.3% 4.2% 9.1% -9.8% -44.3% 19.7% 15.5% -5.5% 10.0%

GLOBAL PERSPECTIVES

7Note: Data based on Russell U.S. equity indices as indicated above and are total returns including dividends for each calendar year or partial year.Source: Russell Investments, FactSet

Equity


11/90

Dow Jones Industrials (price only 100 years)It is not unusual for stocks to have prolonged periods of flat returns.

5,0006,000

10,000

Log

Period of falling

1 000

2,000

3,0004,000

interest rates

200

300400500600

Period of risingin a ion and

405060

100

interest rates

1910 1916 1922 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 1988 1994 2000 2006 2012

GLOBAL PERSPECTIVES

8Source: Dow Jones, FactSet

Equity


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Performance by Market CapitalizationMid-cap stocks have had the best U.S. equity 10-year return record.

Annualized 10-Year Returns

2.2

2.4

Mid-Cap

January 1, 1999 April 30, 2012

Large-Cap: 4.7%Mid-Cap: 7.7%Small-Cap: 7.1%

1.6

1.8

.

of$1

Small-Cap

1.0

1.2

.

Grow

th

Large-Cap

0.4

0.6

0.8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

9Source: FactSet, Russell Investments

Equity


13/90

Stock vs. Bond ValuationStocks look historically attractive based on their earnings yield (E/P) vs. the yield-to-maturity of 10-year Treasuries.

14

16 Earnings Yield (solid = forward, dotted = trailing)

%

10

12

. .

E uiv en o

6

8 7.86

P/E of 13

2

4

1.91Equivalent toP/E of 52

1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

GLOBAL PERSPECTIVES

10ote: arn ngs e s t e nverse o t e rat o an s ca cu ate as t e sum o t e reporte next twe ve mont s earn ngs est mates v e y mar et

capitalization. The 10-year U.S. Treasury yield is used for bonds.Source: Standard & Poors, First Call, Reuters, Bloomberg, FactSet

Equity


14/90

Dividend YieldsDisregarding the 2008 spike, stock dividend yields remain above levels seen since 1996 and remain historicallyattractive relative to bond yields.

4

Stocks Attractive

%% 2Dividend Yields Dividend Yield Minus Bond Yield

3

(2)

2

average

(4)

Bonds Attractive

(6)

1988 1992 1996 2000 2004 2008 2012 1988 1992 1996 2000 2004 2008 2012

GLOBAL PERSPECTIVES

11Note: Bond yield is represented by the 10-year U.S. Treasury note.Source: Standard & Poors, Reuters, FactSet

Equity


15/90

Fundamentals Drive the Stock MarketAdvancing earnings drive markets up, and negative earnings drive markets down, albeit with a reporting lag.

2012 S&P 500 Earnings Forecast: $1052012 S&P 500 Price Forecast: 1425

2,200150%

1,600

,

50%

100%

Price

Grow

thS&P 500 Index (right scale)

1,000

1,300

0% S&P5

00

S&P500E

P

400

700

-100%

-50%growt e t sca e

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

12Source: Standard & Poors, First Call, FactSet, ING Investment Management

Equity


16/90

Corporate Earnings vs. S&P 500 PricesThe S&P 500 sold for 1,469 in 1999 based on less than $40 of annual earnings per share; today the index is about1,400, still a good value with earnings around $100.

$ billions S&P price level

Recessions

1,400

1,600

1,600

1,800

1,000

1,200

1 000

1,200

1,400

S&P500

600

800

600

800

,

Corporate Earnings

200

400

200

400

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

13Earnings data through 9/30/11.Source: FactSet

Equity


17/90

Sector Re orted Earnin s Growth Earnin s Sur rise

S&P 500 Historical and Projected EarningsFirst quarter 2012 earnings reports are more than 60% complete with positive earnings surprises for more than 75%of those reporting.

Actual / Total Percent Positive Negative Percent Positive Negative

Energy 24 / 42 -1% 13 11 -1% 15 9

Materials 23 / 31 -10% 10 11 7% 20 3

Industrials 44 / 61 14% 35 9 8% 35 8onsumer scre onary -

Consumer Staples 22 / 42 2% 10 12 2% 14 3

Health Care 35 / 52 1% 23 12 4% 24 6

Financials 56 / 80 25% 40 14 19% 39 12

Information Technology 43 / 71 20% 22 21 11% 31 6

Telecommunication 5 / 8 -1% 3 1 15% 3 2

Utilities 8 / 33 -13% 1 7 0% 3 5S&P 500 305 / 500 9% 184 114 8% 220 60

-

0%

25%

50%

Historical Projected

-50%

-

1Q 06 1Q 07 1Q 08 1Q 09 1Q 10 1Q 11 1Q 12

GLOBAL PERSPECTIVES

14o e: arn ngs row s e percen age c ange n e cumu a ve s are weg e earn ngs rom a o a year ago. urpr se ercen s e s areweighted average of the ratio of actual company earnings vs. the consensus estimate.

Source: Bloomberg, Standard & Poors, Factset

Equity


18/90

Fundamental Characteristics by Market Capitalization

Size matters in terms of growth and valuation. Smaller stocks have higher growth rates, and in terms of the P/E ratio,higher valuation.

Characteristics S&P 500 Russell Midcap Russell 2000

Market Capitalization 12,635,655 4,190,029 1,201,637

# of Securities 500 782 1957

Dividend Yield 1.96 1.63 1.39

Growth S&P 500 Russell Midcap Russell 2000

Historical 3 Year Sales Growth % 15.90% 15.78% 18.20%

Long-term Estimated Growth % 10.97% 12.73% 13.81%

Estimated 2011 EPS Growth % 13.16% 17.10% 27.08% High

ValuationS&P 500 Russell Midcap Russell 2000

Price/Earnin s 14.55 20.30 25.18Rich

growth

Price/Cash Flow 7.82 9.37 9.06

Price/Book 2.29 2.21 1.94

va ua on

GLOBAL PERSPECTIVES

15Source: Russell Investments, Standard & Poors

Equity


19/90

Operating Profits and Operating Margins

Corporate profits (excluding financials) have improved steadily along with operating margins, which collapse inrecessions and surge in recoveries.

15Operating Margins (S&P 500 ex-financial)

%

1,100

1,200

Operating Profits (S&P 500 ex-financial)

1,085

13

1414.0

900

1,000

12700

800

11

500

600

1996 1998 2000 2002 2004 2006 2008 2010 20121996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

16ote: a ues are ca cu ate ase on a mar et va ue-we g te sum o t e quarter y stor ca resu ts o t e & 500 const tuents exc u ng nanc a s.Values reflect results for trailing four quarters at each quarter end. Data as of 12/31/11.

Source: Standard & Poors, Compustat, FactSet

Equity


20/90

Equity Volatility (VIX)

Projected market volatility spikes in times of crisis then drops into the normal range as fear, uncertainty and doubtsubside apparently the prevailing sentiment today.

80

90

12/31/07 = 22.5

11/20/08 = 80.9

Lehman Crisis

50

60

12/31/08 = 40.004/30/12 = 17.2

U.S. Credit

30

40

uro r s sDowngrade

0

10

20

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

17Source: Standard & Poors, Chicago Board Option Exchange, FactSet

Equity


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Bond and Loan Returns

Although long-term U.S. Treasuries were winners in crisis periods, over time, risk relates to return in a rational way,and riskier bonds have been the leaders.

Index Spread Apr-12 YTD 2011 2010 2009 2008 2007 2006 1 year 3 years 5 years 10 years

U.S. Investment Grade

Treasury 0 1.5 0.1 9.8 5.9 (3.6) 13.7 9.0 3.1 8.9 5.0 6.4 5.6

Treasur (1-3YR) 0 0.2 0.1 1.6 2.4 0.8 6.7 7.3 3.9 1.2 1.6 3.4 3.2

Treasury (20+YR) 0 4.7 (2.4) 33.8 9.4 (21.4) 33.7 10.2 0.9 30.2 10.6 10.3 8.7

Government Related 68 0.9 1.8 6.7 5.0 2.5 8.5 8.0 4.3 6.8 5.5 6.1 5.5

Corporate 185 1.4 3.5 8.1 9.0 18.7 (4.9) 4.6 4.3 9.1 12.6 7.1 6.6

Fixed rate MBS 69 0.7 1.2 6.3 5.5 5.8 8.5 7.0 5.2 5.8 5.4 6.4 5.5

ABS 64 0.7 1.5 5.1 5.9 24.7 (12.7) 2.2 4.7 5.1 9.0 4.3 4.3CMBS 203 0.5 3.6 6.2 18.5 28.3 (20.5) 5.6 4.7 5.9 16.5 6.6 N/A

Hybrid ARM 3 0.3 1.1 3.6 2.5 7.8 6.1 6.3 4.8 3.6 4.1 5.1 N/A

. . . . . . . . . . . .

High Yield and Global

High Yield 582 1.0 6.4 5.0 15.1 58.2 (26.2) 1.9 11.8 5.9 19.7 8.0 9.2Global Aggregate 86 1.2 2.1 5.6 5.5 6.9 4.8 9.5 6.6 3.3 7.6 6.4 7.1

Emerging Markets 361 1.4 6.9 7.0 12.8 34.2 (14.7) 5.2 10.0 11.1 16.1 8.5 11.1

Senior Loans 625 0.1 4.2 1.3 10.8 51.6 (29.1) 2.0 6.8 2.7 14.3 4.8 5.9

Note: All spreads are option-adjusted spreads except for Emerging Markets and Senior Loans. Emerging Markets spread is the spread over the U.S. Treasury

GLOBAL PERSPECTIVES

18curve. Senior Loans spread is the average three-year call secondary spread. All returns are total returns including dividends expressed as percentages.Returns for 3- and 5-year periods are annualized. All other returns are cumulative.Source: Barclays Capital, JPMorgan, Standard & Poors

Fixed Income


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Yield Curves

The steep U.S. yield curve is indicative of economic growth. Higher yield opportunities can be found outside the U.S.

U.S. Yield Curve Global Yield Curves

5

6

12/31/09

12/31/10

%

10

12

14 %

Brazil

India

2

3 12/31/1104/30/12

12/31/08

4

6

8Mexico

UKEuro

Africa

3 mo 2 yrs 5 yrs 10 yrs 30 yrs3 mo 2 yrs 5 yrs 10 yrs 30 yrs0

1

02

US

Japan

Date 3 mo 2 yrs 5 yrs 10 yrs 30 yrs

04/30/12 0.09 0.25 0.81 1.91 3.11

12/31/11 0.01 0.24 0.84 1.88 2.90

12/31/10 0.12 0.59 2.00 3.29 4.34

04/30/12 3 mo 2 yrs 5 yrs 10 yrs 30 yrs

US 0.09 0.25 0.81 1.91 3.11

UK 0.47 0.44 1.07 2.11 3.34

Euro Zone 0.01 0.07 0.60 1.66 2.37

. . . . .

12/31/08 0.09 0.73 1.44 2.06 2.56

. . . . .

Mexico 4.35 4.63 5.16 6.21 7.38

South Africa 5.60 5.71 7.75 7.65 8.77

India 8.39 8.11 8.42 8.67 8.87

Brazil 7.76 9.03 10.29 10.71 10.82

GLOBAL PERSPECTIVES

19Source: Reuters, Bloomberg, FactSet

Fixed Income


23/90

Global Yields

Investors seeking income may benefit from the rich opportunities for higher yield available from global bonds.

10-Year Sovereign Bond Yields

1.9%

1.7%

U.S.

Euro Region

3.7%

2.1%

2.0%

Australia

United Kingdom

Canada

5.8%

5.4%

4.0%

Philippines

Poland

New Zealand

8.7%

7.7%

6.0%

India

South Africa

Indonesia

.

GLOBAL PERSPECTIVES

20Source: Bloomberg

Fixed Income


24/90

Fed Funds Target Rates and 3 Month T-Bill Yield

Both the Fed funds rate and 3-month U.S. Treasury bill yields are at their lowest levels ever, and the Fed hasindicated it intends to keep rates low into 2014.

12

14

8

9% %Fed Funds Target Rates 3 Month T-Bill Yield

8

10

5

6

4

6

2

3

4

0

2

0

1 1 basispoint

Average

1980 1984 1988 1992 1996 2000 2004 2008 2012 1988 1992 1996 2000 2004 2008 2012

GLOBAL PERSPECTIVES

21Note: 3-Month T-Bill Yield is annualized based on purchase at a discount and holding to maturity.Source: Reuters, Bloomberg, FactSet

Fixed Income


25/90

U.S. Treasury Yield

Nominal and real yields on 10-year U.S. Treasuries are far below long-term averages, and the Feds open marketoperations have been designed to keep them low.

9

10

5

6 %% 10-Year Treasury Yield Real 10-Year Treasury Yield

6

7

3

4

4

5

1

2

1

2

3

1

00%

2.03%

1988 1991 1994 1997 2000 2003 2006 2009 2012 1988 1991 1994 1997 2000 2003 2006 2009 2012

GLOBAL PERSPECTIVES

22Note: Real 10-Year Treasury Yield is equal to the 10-Year Treasury yield minus core CPI (ex food and energy)Source: Federal Reserve, Bloomberg, FactSet

Fixed Income


26/90

Municipal Bond Yields Treasury Yields

Municipal yields are well above Treasury yields; defaults have been minimal, but pressures to cut spending andbalance budgets have been intense.

180

200 %

Muni yields should be (1- tax rate) x Treasury

140

160e . n eren e ou e ex a na edifferences in credit or liquidity.

100

120 117

60

80

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

23Note: Municipal yields represent the yield-to-worst for the Merrill Lynch AA municipal index. 10-year U.S. Treasury yields are used.Source: Merrill Lynch, Reuters, Bloomberg, FactSet

Fixed Income


27/90

Corporate Spreads and Ted Spread

Credit spreads have declined since the 2008 crisis and still offer good opportunity; TED spreads are in the normalrange despite debt and deficit concerns.

6

7 % %

Lehman crisis

Corporate Spreads Baa Ted Spread (Libor 3 month Treasury)4

4

5

2

2

3 3.0

0.38

1

0

1 Euro crisis II0

1988 1991 1994 1997 2000 2003 2006 2009 2012 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

GLOBAL PERSPECTIVES

24

ote: orporate aa prea s are enc mar average rates n excess o 10-year . . reasury y e s. or s t e on on nter- an er ate, t einterest rate banks charge each other for loans.Source: Moodys, Reuters, Federal Reserve, Bloomberg, FactSet

Fixed Income


28/90

Mortgage Spreads and Loan Delinquency

Mortgage-backed bond spreads are healthy. Home loan delinquencies far exceed commercial and industrial loans;both have declined since their peaks.

10

12

3.0

3.5 Most recentdata: 12/30

%% Mortgage Spreads Loan Delinquency

82.5

es ent a.

4

6

1.5

2.0

1.7

21.01.6

1988 1992 1996 2000 2004 2008 20121988 1992 1996 2000 2004 2008 2012

.

GLOBAL PERSPECTIVES

25Note: Mortgage spread equals the Freddie Mac 30-year fixed rate mortgage yield minus the 10-year U.S. Treasury yield.Source: Federal Reserve (Federal Financial Institutions Examination Council Report), Freddie Mac, FactSet

Fixed Income


29/90

The Debt Super Cycle Unwind

The current economic environment is a continuation of the unwinding of the debt super cycle that peaked in 2008.

60

80

100

120

G

DP

0

20

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

%o

f

Advanced economies, General government gross debt Emerging & Developing Economies, General government gross debt

0

2

(8)

(6)

(4)

%

ofGDP

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Advanced economies, General government net lending/borrowing

Emerging & Developing Economies, General government net lending/borrowing

GLOBAL PERSPECTIVES

26Source: IMF; Reuters EcoWinIMF Projections as of 11/15/11

Fixed Income


30/90

European Economic Issues

Europes situation is potentially destabilizing, but the most likely path is a long process that avoids catastrophe butallows recession.

10

15

Euro Zone Industrial Production (year-over-year %)

0

5

Italy

Germany

Franceear

(%)

(15)

(10)

Spain

Year-ov

er-

30

(25)

(20)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

27Source: BloombergData as of 1/31/12.

Fixed Income


31/90

U.S. Economic Headwinds

The U.S. economy will continue to face the effects of consumer deleveraging, but growth will prove resilient, albeitsubdued.

90

95

100

Total stock of each sector's debt outstanding,shown as a percentage of nominal GDP

Governments

70

75

80

85 Households

Businesses

45

50

55

60

2025

30

35

40

1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

GLOBAL PERSPECTIVES

28Source: Bloomberg and ING Investment ManagementData as of 12/31/11.

Fixed Income


32/90

A Capital-Spending-Led Recovery

Corporations have ample capacity to retool with cash not debt while contributions to growth from fiscal policy,housing, and consumption may be muted.

19

21

14.5

15.5

Per

ce

17

12.5

13.5

To

talGDP

tofNon-Fin

Nominal Investment Spending Net Cash Flow

13

15

10.5

11.5

Percen

to

f nc

ialCorpor

9

11

8.5

9.5

teGDP

1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

GLOBAL PERSPECTIVES

29Source: Bloomberg, ING Investment ManagementData as of 9/11/11.

Fixed Income


33/90

Monetary Policy Outlook

Both developed and emerging market central banks continue to pursue accommodative monetary policies.

3,000

3,500

2,500

s

Federal Balance Sheet ($)

1,500

2,000

Millio

ECB Balance Sheet ()

1,000

2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012

GLOBAL PERSPECTIVES

30Source: Bloomberg, ING Investment ManagementData as of 3/7/12.

Fixed Income


34/90

Spread Sectors Outlook

In an increasingly scarce yield environment, higher quality spread sectors will be very well supported, and yieldspreads will continue to compress.

15%

20%High Yield Spread Over U.S. Treasuries

High Yield Default Rate500

600

700U.S. Corporate Investment Grade

5%

10%

100

200

300

400OA

1000ries

Emerging Market Hard Currency Debt

1991 1998 2005 20122007 2008 2009 2010 2011 2012

2,000

CMBS Investment Grade: Eligible for U.S. Aggregate

400

600

800

verU

.S.

Treas

1,000

1,500

OAS

0

200

2007 2008 2009 2010 2011 2012Spreado

JPMorgan EMBI-Global Diversified Index02007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

31Source: Barclays Capital Aggregate Benchmark Index data, Moodys.Data as of 2/29/12.

Fixed Income


35/90

Residential Housing

The excess supply of existing homes is at the lowest level since the housing crisis began in 2007. We are past theworst point of house price deflation and should see slow improvement going forward.

20%

25%3

4Months Supply of Existing Single-family Homes(shown inverted)

5%

10%

15%5

6

7

-5%

0%8

9National House Price Inflation(annual % change, Case-Shiller Index)

-15%

-10%10

11

-1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

32Source: Bloomberg and ING Investment ManagementData as of 1/31/12.

Fixed Income


36/90

Commercial Real Estate

Commercial real estate prices, highly correlated with the business cycle, have stabilized; higher-end property pricesare rising; the broader market is still well below peak 2007 valuations, but will rise as the economy strengthens.

10%

11%

180

190

200

8%

9%

150

160

170

Moody's CommercialProperty Price Index

6%

7%

130

140

Unemployment Rate

5%

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

33Source: GA LLC, REAL, RCA, BloombergData as of 12/31/11.

Fixed Income


37/90

World Market Returns by Region USD

Emerging market equity (EME) has often been a top performer, lagged in 2011, but began 2012 with a strong rally.

EMEPac

Ex-JapanEME

Pac

Ex-JapanEME

Europe

Ex-UKEME Japan EME EME S&P 500

Pac

Ex-Japan

-2.4% -5.8% 56.3% 29.6% 34.5% 36.4% 39.8% -29.1% 79.0% 19.2% 2.1% 13.0%

Pac Pac Pac Pac Pac PacEx-Japan Ex-Japan

apanEx-Japan Ex-Japan

Ex-Japan Ex-Japan

-9.4% -6.0% 47.0% 26.0% 25.6% 33.2% 31.7% -37.0% 73.0% 17.1% -2.5% 12.8%

S&P 500 JapanEurope

Ex-UK

Europe

Ex-UK

Pac

Ex-JapanEME

Europe

Ex-UK

Europe

Ex-UKUK Japan

Pac

Ex-JapanS&P 500

- . - . . . . . . - . . . - . .

UK UK Japan UK EuropeEx-UK

UK UK UK EuropeEx-UK

S&P 500 Japan UK

-14.1% -15.2% 36.2% 19.6% 11.3% 30.7% 8.4% -48.3% 33.9% 15.1% -14.2% 9.0%

Ex-UK

Ex-UKUK Japan UK S&P 500 S&P 500 EME S&P 500 UK

Ex-UK

Ex-UK

-22.0% -19.9% 32.1% 16.0% 7.4% 15.8% 5.5% -47.1% 26.5% 8.8% -14.5% 8.2%

Japan S&P 500 S&P 500 S&P 500 S&P 500 Japan JapanPac

Ex-Japan JapanEurope

Ex-UK EME Japan

- . - . . . . . - . -50.0% . . - . .

GLOBAL PERSPECTIVES

34Note: All data are based on equity indices for each regional or country index and are total returns including dividends for each calendar year or partial year.Source: MSCI, Standard & Poors, FactSet

International


38/90

Global Returns Local and USD

Given geopolitical, economic and financial fears, 2011 equity returns were down, but 2012 had a strong start;emerging markets remain the long-term leader.

Index Currency Apr-12 YTD 2011 2010 2009 2008 2007 2006 2005 1 year 3 years 5 years 10 years

Global Markets

International USD (1.8) 8.9 (11.7) 8.2 32.5 (43.1) 11.6 26.9 14.0 (12.4) 12.3 (4.3) 5.9

. . . . . . . . . . . . .

Emerging Mkt USD (1.2) 12.8 (18.2) 19.2 79.0 (53.2) 39.8 32.6 34.5 (12.3) 18.7 3.8 14.3

local (0.5) 10.1 (12.5) 14.4 62.8 (45.7) 33.5 28.9 35.8 (5.0) 15.4 4.2 12.5

Emerging market returns have surpassed by far the

Regions

Euro x-UK USD (3.9) 8.2 (14.5) 2.4 33.9 (45.0) 17.5 36.4 11.3 (21.2) 9.6 (6.1) 5.9local (3.3) 5.8 (12.1) 5.1 29.0 (42.7) 6.6 22.5 28.6 (12.7) 7.6 (6.7) 1.5

UK USD 1.3 9.0 (2.5) 8.8 43.4 (48.3) 8.4 30.7 7.4 (4.4) 18.1 (2.9) 5.7

local (0.3) 4.3 (1.8) 12.2 27.7 (28.5) 6.6 14.6 20.1 (1.8) 14.6 1.2 4.6

Pac x-Japan USD 1.5 13.0 (12.7) 17.1 73.0 (50.0) 31.7 33.2 14.8 (8.6) 21.8 3.1 13.2

local 1.0 11.1 (12.8) 6.1 45.8 (41.6) 21.6 25.9 20.3 (5.7) 11.8 (0.5) 7.7Ja an USD 3.2 7.8 14.2 15.6 6.4 29.1 4.1 6.3 25.6 3.1 7.5 5.3 3.1

local (6.1) 11.9 (18.6) 0.7 9.3 (42.5) (10.1) 7.3 44.7 (4.7) 0.3 (12.6) (1.6)

S&P 500 (0.6) 11.9 2.1 15.1 26.5 (37.0) 5.5 15.8 4.9 4.8 19.5 1.0 4.7

GLOBAL PERSPECTIVES

35Note: Returns for periods greater than one year are annualized. All returns reflect total return including dividends expressed as a percentage.Source: MSCI, Standard & Poors, FactSet

International


39/90

Country Returns USD (YTD)

Sovereign debt and deficit fears remained the dominant global headline risks, yet stock markets around the worldwere mostly positive at the start of 2012.

Developed Markets (USD)22 20 18 18 1714 13 13 12 12 11 10 9 9 8 8 8 7 6 6 4

0 -3 -15

Emerging Markets (USD)4128 26 25 24 23 23

16 15 15 14 14 14 13 12 10 10 8-5 -34

GLOBAL PERSPECTIVES

36Note: All returns reflect total return including dividends expressed as a percentage.Source: MSCI, Standard & Poors, FactSet

International


40/90

U.S. and International Stocks vs. Bonds

Both global bonds and international stocks have outperformed their U.S. counterparts over the last ten years but withhigher volatility.

2.2

2.4

2.6

Barclays Capital

1.6

1.8

2.0

hof$1

Barclays Capital U.S.Aggregate Index

MSCI EAFE Index

Global AggregateIndex

1.0

1.2

1.4

Growt

S&P 500 Index

break even

0.4

0.6

0.8

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

37Source: FactSet, Russell Investments

International


41/90

Major Currencies

Although the U.S. dollar dropped only about 1% in 2011, the dollar is 38% below its 1985 peak compared to a trade-weighted basket of world currencies.

120

140

160

1.2

1.4

1.6

/ $$ / 12/31/11: 76.944/30/12: 79.85Change: -3.8%

rising vs. $ falling vs. $

1988 1991 1994 1997 2000 2003 2006 2009 2012

60

80

100

1996 1998 2000 2002 2004 2006 2008 2010 2012

0.8

1.012/31/11: 1.304/30/12: 1.32Change: 1.5%

2.0

2.2

12/31/11: 1.554/30/12: 1.62

$ / 14012/31/11: 82.183/30/12: 82.15

rising vs. $ $ falling vs. majorcurrencies

1.4

1.6

1.8 Change: 4.5%

80

100

Change: -0%

1988 1991 1994 1997 2000 2003 2006 2009 2012.

1982 1986 1991 1995 1999 2004 2008 2012

GLOBAL PERSPECTIVES

38Source: FactSet

International


42/90

International Economics

China, India and Brazil are growing rapidly, and China is now second only to the U.S., while Germanys export-driven economy is the runaway euro zone leader.

Countries Trade (% of GDP)

Developed Markets

USD

(Billions) Per Capita

1-Yr

Change

5-Yr

Change Exports

Population

(Millions)

Unemployment

%

Median

Age

US 15,319 49.3 1.7% 2.7% 9.8 % 314 8.2 37

GDP Demographics

Germany 3,481 42.8 3.6% 3.9% 41.7 % 82 6.7 45

Canada 1,713 50.3 2.5% 2.8% 27.7 % 34 7.2 41

UK 2,435 38.2 0.7% 2.6% 18.3 % 63 7.8 40

urozone , . . . . .

Japan 6,062 47.6 (0.7%) 1.7% 13.9 % 127 4.5 45

Ireland 208 45.8 (0.4%) 5.3% 60.4 % 5 14.3 35

Emerging Markets

Brazil 2,426 11.9 6.7% 3.9% 10.9 % 206 6.2 29

Russia 1,689 13.9 4.5% 8.9% 34.3 % 138 6.5 39

India 1,674 1.4 7.8% 9.4% 16.1 % 1,205 7.2 26

China 7,294 7.1 8.9% 10.4% 27.8 % 1,343 4.1 36

Mexico 1,122 9.9 5.4% 5.2% 32.2 % 115 5.12 27

GLOBAL PERSPECTIVES

39Source: FactSet. Data is most recent available.

International


43/90

Global Stock Fundamentals

Emerging market equities appear to offer comparable profitability and better balance sheet strength with valuationsat or below those of S&P 500 and EAFE stocks.

S&P 500 MSCI EAFE MSCI Emerging Markets

P/E (next fiscal year estimated earnings) 13.3 11.5 10.5

. . .

Price to Cash Flow Ratio 9.0 6.7 6.8

Price to Sales Ratio 1.3 0.7 0.7

Profitability

Return on Equity (ROE) 15.7 11.1 14.3

Balance Sheet Strength

Long-term Debt to Capital Ratio 35.6 37.1 24.6

GLOBAL PERSPECTIVES

40

Note: Valuation and Profitability figures are weighted harmonic averages, a statistical technique that reduces the effects of extreme outlying data on the

average. Long-term Debt to Capital figures are weighted averages.Source: FactSet

International


44/90

World GDP and Emerging Market Importance

World GDP grew steadily through the great recession, supported by the largest emerging markets, which now out-produce the largest developed economies.

80,000 $ trillions World GDP

70

80

Percent Contribution to Global Growth,PPP Basis

%

U.S. + European Union + Japan

Emerging Market Importance

60,000

50

60

40,000

30

40

20,000

10

20

Global Emerging Markets Top 8*

1990 1993 1996 1999 2002 2005 2008 2011 1991 1995 1999 2003 2007 2011

GLOBAL PERSPECTIVES

41

International

ource: e or an roup

*China, India, Russia, Brazil, Mexico, Korea, Indonesia and TaiwanData as of 12/31/10.


45/90

Developed and Emerging Market Contrasts

Aging populations in mature economies strain public resources and produce heavier government debt burdens thathinder economic growth.

50

2010 2030 2050

Population % over age 60

140 % of GDP

Gross Government Debt to GDP

30 100

120G7*

All AdvancedEconomies

20

60

80

0

10

20

40Emerging and Developing

Economies

Dev.

. .2008 2009 2010 2011 2012 2013 2014 2015

GLOBAL PERSPECTIVES

42*G7= France, Italy, Germany, Japan, U.K., U.S and CanadaSource: IMF, CIA World Factbook

International


46/90

Euro Zone

Even with total debt at 152% of GDP, Greece accounts for less then 3% of the euro zone, but Italy and Spain aremajor economies with much higher total debt at 120% of GDP.

Austria3% Belgium

C rus

SlovakRepublic Slovenia

Euro Area 2010 GDP by Country

140

160

2000Gross Debt in Euros

(billions)Debt as % of

GDP

Euro Zone Debt

0%

Finland2%

Netherlands6%

Portugal2%

Spain12% 100

120

1500

France21%

Italy

Luxembourg0%

0%

40

60

500

1000

Germany27%

Greece3%

Ireland2% 0

20

0

GLOBAL PERSPECTIVES

43Source: International Monetary Fund (IMF) as of 2011

International


47/90

Tectonic Shift Frontier Markets

Frontier countries are emerging markets with lower capitalizations and less liquidity. They offer high growth potentialand are fueling the global growth story as they evolve and mature.

Index Currency Apr-12 YTD 2011 2010 2009 2008 2007 1 year 3 years 5 years

Global Markets

MSCI Frontier Emerging Markets USD 1.5 13.8 (17.3) 29.1 25.8 N/A N/A (2.3) 16.3 N/A

MSCI Frontier Markets USD (0.8) 4.7 (18.4) 24.2 11.7 (54.1) 42.1 (13.8) 9.0 (7.2)

Select Countries

South Africa USD 0.7 12.1 (14.4) 34.2 57.8 (37.9) 18.1 (7.1) 23.8 5.2

local 1.7 7.6 4.5 20.6 25.7 (16.0) 14.5 9.3 20.1 7.2

Turkey USD (2.6) 23.8 (35.2) 21.2 98.5 (62.1) 74.8 (23.4) 19.5 1.1

local (3.9) 15.3 (20.4) 24.5 92.8 (50.1) 44.7 (11.3) 23.5 6.3

. . . . . . . . . .

local (1.9) 4.7 (18.1) 19.6 37.6 (45.2) 7.9 (19.0) 13.2 (5.5)

Qatar USD 0.0 4.0 8.2 31.3 8.9 (26.3) 54.2 6.9 22.6 13.0

local 0.0 4.0 8.2 31.3 8.8 (26.3) 54.2 6.9 22.6 13.0

Indonesia USD (0.5) 3.5 6.5 34.6 127.6 (56.2) 55.0 0.2 36.8 16.7

local (0.0) 4.9 7.2 29.1 96.2 (49.2) 61.9 7.6 30.5 17.0

S&P 500 (0.6) 11.9 2.1 15.1 26.5 (37.0) 5.5 4.8 19.5 1.0

GLOBAL PERSPECTIVES

44

International

Source: Factset


48/90

China Hard Landing

Chinas soaring state investments, property bubble and declining exports raise questions about the likelihood of asoft landing from its enviable recent growth.

2,000

3,000 State InvestmentConsumer SpendingGovernment SpendingNet Exports

$ billionsState Investment increased

94% in four years and is now50% of GDP.

1,000

2002 2003 2004 2005 2006 2007 2008 2009 20100

35Chinas reported Debt % to GDP

20

25

30

understatedbased oncontingentliabilities

10

15

2002 2003 2004 2005 2006 2007 2008 2009 2010

GLOBAL PERSPECTIVES

45Source: International Monetary Fund (IMF) as of 2011, China Bureau of Statistics

International


49/90

Consumer Trends

At about 70% of GDP, the U.S. consumer is the game changer in the economic recovery. Consumption, income andretail sales are at new highs, and retail sales are rising consistently.

$ billions14000

7,000

8,000 450

12000

5,000

6,000400

Personal Income

100003 000

4,000

350

2,000

300Retail Sales

Personal Consumption Expenditures

2007 2008 2009 2010 2011 20128000

,

2004 2006 2008 2010 2012250

GLOBAL PERSPECTIVES

46Source: FactSet

Economy


50/90

Consumer Confidence

U.S. consumer confidence seems low, but consumer confidence is backward-looking and has often been a contraryindicator for subsequent stock market returns.

140

160 Index LevelMarket returned 16.3% in

subsequent 12 months

100

120

60

80

Present

Total Index

Market returned 13.9% in

20

Market returned 49.8% in

subsequent 12 months

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

47Source: The Conference Board, Factset

Economy


51/90

U.S. Leading Indicators

U.S. Leading Indicators have been consistently positive in fact, for 21 of the last 24 months.

0.0

1.0

2.0 % Recessions

(4.0)

(3.0)

(2.0)

.

1.0

2.0

0.0

Source: Bloomberg, FactsetThe Conference Board U.S. Leading Index consists of the weighted average of the following indices:

2010 2011.

2012

GLOBAL PERSPECTIVES

48

Economy

. , . . ,

4. Vendor performance, slower deliveries 5. Manufacturers new orders, capital 6. Building permits, new private housing units7. Stock prices, 500 common stocks 8. Money Supply, M2 9. Interest Rate Spreads10. Index of consumer expectations


52/90

Broadening Manufacturing

U.S. manufacturing capacity utilization is expanding from record lows and is nearing historically normal levels.Manufacturing is a significant part of the U.S. economy, accounting for 61% of U.S. exports.

85

90 U.S. Manufacturing Capacity Utilization U.S. Export Composition%

AgricultureProducts, 6%

Other, 4%

80 78%

70

75Services, 30%

65

Manufacturing

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012,

GLOBAL PERSPECTIVES

49Source: FactSet , US Census Bureau

Economy


53/90

Broadening Manufacturing

U.S. factory activity remains in expansionary territory as does the global index, but the euro zone is hovering atthe precipice of economic contraction.

60

65

Euro zonePMI

60

65Expansionary (>50)

Non Manufacturing

U.S. Institute for Supply Management Global Manufacturing

50

55

50

5554.8

56.8

50.5

40

45

Global PMI

40

45

Manufacturing

.

30

35

30

35Contractionary (


54/90

Tectonic Shift Business Fixed Investment

A strong recovery in corporate profits and cash flows is spurring a revival in business spending on equipment andsoftware.

1,600

1,800 $ billions

1,400

Business Fixed Investment

Highest

1,000

1,200

Equipment and Software

800

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

51Source: Factset

Economy


55/90

Employment Payrolls

Total payrolls, including all non-farm employment, have been positive, but not enough to bring unemployment ratesdown significantly.

400

000s+121 most

recentprivate

Total Payrolls

0

(400)

(200) +120 mostrecent

totalTotal Private Payrolls

(800)

(600)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

52Source: FactSet

Economy

U l R


56/90

Unemployment Rate

High unemployment may reluctantly recover as growth resumes; recent reports are encouraging, and news of jobgrowth and payrolls has been positive.

800,000

11%

12%

Unemployment Rate

000sRecessions

600,000

8%

9%

400,000

5%

6%

7%

200,0003%

4%

Initial Unemployment Claims

1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

GLOBAL PERSPECTIVES

53Source: Bureau of Labor Statistics, FactSet

Economy

R l GDP


57/90

Real GDP (Q/Q)

The U.S. has recovered the output level it lost in the recession and has now reached new highs. Expansionshistorically last about five years.

Breakdown

Consumption: 71%Government: 20%

Investment: 12%15

20

$10

$11

$12

xports:Imports: (15%)

10

$7

$8

$9

1Q122.2%

%)

Real annualized GDP % change

Gr

0

5

$4

$5

$6

Per

cent( w

th

of$1

(10)

(5)

$1

$2

$3

Real GDP Cumulative Value starting at $1

1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

GLOBAL PERSPECTIVES

54Source: Bloomberg

Economy

Inflation CPI


58/90

Inflation CPI

Core and headline inflation remain under control; while commodities prices spiked dramatically in 2009-2010, recentfigures show a marked softening.

600

70015

%Index Level

50010

CRB Index (left)Core Inflation (right axis)

Headline Inflation (right axis)

300

4005

100

200

5

0

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

55Note: Core CPI reflects consumer price inflation excluding food and energy.Source: Factset.

Economy

S&P Case Shiller Home Price Index


59/90

S&P Case-Shiller Home Price Index

Home values have fallen about 32% since 2006; the 20 City Composite Index has steadily declined, though recentdata have seen upticks in some areas.

15

20

200

220Index Level

207

% change

0

5180

(10)

(5)

140

160

25

(20)

(15)

100

120

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GLOBAL PERSPECTIVES

56Source: Factset, S&P Case-Shiller, Bloomberg

Economy

Home Sales and Housing Starts


60/90

Home Sales and Housing Starts

Housing is still lagging the U.S. economic recovery; existing homes and new household formation suggest thatoutstanding supply will remain a hurdle for some time.

7,000

7,500 2,500000s 000s

Peak: 2.27 millionhousing starts/month

5,500

6,000

6,500

1,500

,

Housing Startsincluding multi family(right axis)

4,500

5,0001,000

Existing Homes (left axis)

3,500

4,000500New Homes (right axis)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

,

GLOBAL PERSPECTIVES

57Source: U.S. Census Bureau, FactSet

Economy

Federal Budget Deficit


61/90

Federal Budget DeficitTroubling projected budget deficits are driven by large mandatory programs, defense and interest payments, makingit difficult to reduce government spending.

Historical

Current

Projected

1.4

1.3

1.4$ trillions

Federal Budget Deficit Federal Budget Breakdown

20%

Defense

14.3%

OtherMandatory

1.2

0.90.8

40.7%

Social Security,

6% Interest

OtherDiscretionary

0.5

0.8 0.8

e care,Medicaid

0.30.2

0.2

05 06 07 08 09 10 11 12 13 14 15 16

GLOBAL PERSPECTIVES

58Source: Congressional Budget Office, Office of Management and Budget, Data as of 10/31/11.

Economy

U S Government Debt and Deficit Perspective


62/90

U.S. Government Debt and Deficit PerspectiveTotal federal public debt outstanding exceeds 90% of GDP, and the current U.S. deficit is more than 9% of GDP(excluding Social Security and Medicare).

100

120

> 90%of GDP

16,000,000% of GDP$ U.S. Government Debt Deficit Levels

60

80

8 000 000

12,000,000

Debt

40

> 9.4%4,000,000

0

20

0

Debt

Deficit

Deficit

1964 1970 1976 1982 1988 1994 2000 2006 20121964 1972 1980 1988 1996 2004 2012

GLOBAL PERSPECTIVES

59Source: Factset

Economy

Foreign Ownership of U S Treasuries


63/90

Foreign Ownership of U.S. TreasuriesForeign ownership of U.S. debt has more than tripled since 2000, in effect, financing U.S. consumption andfacilitating unsustainable deficit spending.

5,000$ billions

Europe11%

$4.6 trillion

Foreign Ownership of Treasuries Breakdown of Foreign Ownership

3,000

, Other17%

Commodity Exporters8%

2,000

Offshore16%

Japan

0

1,000

China27%

2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

60Source: U.S. Treasury. Data as of 9/30/11, Factset

Economy

Corporate Tax Rates


64/90

Corporate Tax RatesThe average marginal corporate tax rate for all OECD countries is 24.3%. The U.S. is highest at 35%.

Corporate Tax Rates

.0%

.0%

0.0

%

0.0

%

0.0

%33.0

%

33.3

%

34.0

%

35.0

%Canada lowered its rate in 2011and lowered it again in 2012

% 5.0

%

16.5

%

16.5

%

17.0

%

18.0

%20.0

%

20.0

% 24.3

%

25.0 28 28

12. 1

Ireland

ada-2012

ada-2011

on

gKong

Sin

gapore

C

anada

Russia

Turkey

EC

DAVG

China

U.K.

Ind

onesia

A

ustralia

Japan

India

Germany

France

Brazil

U.S.A.

Can

Can

GLOBAL PERSPECTIVES

61Source: Bloomberg, CIA World Factbook

Economy

Gold and Copper Prices


65/90

Gold and Copper PricesGold, regarded as a safe haven and inflation hedge, actually sells for less today in real terms than in 1980. Coppersmany industrial uses make it a strong proxy for economic growth.

$2,000

10,000

$/metric ton

1,664

Gold Copper

$1,200

,

8,000

$800

4,000

, 8,529

$4002,000

Real Price/oz.

om na r ce oz.503

1976 1982 1988 1994 2000 2006 2012$0

1990 1993 1996 1999 2002 2005 2008 2011

GLOBAL PERSPECTIVES

62Source: FactSet, (gold divided by CPI U.S. city average with 9/30/1976 = 100)

Economy

Oil Price and Intensity


66/90

yEnergy prices rise and fall based on political turmoil, and gasoline prices follow suit, but the required amount of oilper GDP output in the U.S. (oil intensity) has steadily declined.

140

160

1,000

Barrels per $1 million of GDP Price $ per Barrel

100

120

800

tensity

CrudeOil(

105

60

80

600OilIn

YM$/billion)

0

20

200

400

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

63Note: Oil Prices are West Texas Intermediate light crude spot price (NYMEX).Source: US Dept of Energy, FactSet

Economy

Tectonic Shift Energy


67/90

gyThe abundance of natural gas in North America, as well as the ability to extract oil from shale, is changing the globalenergy landscape.

Horn River

Montney Colorado Group Shale Gas Basins

Gammon Utica Horton Bluff

Structural Deformation of Crust

BakkenMowry

Green RiverBaxter

Mancos

McClure

PierreOhio

Marcellus

Utica

Antrim

New Albany

Excello/Mulkey

Mobrara

Cane Creek

Monterey

GothicHovenweep

Lewis

Mancos

Palo Duro

Barnett

Woodford Fayetteville

Barnett/Woodford

HaynesvilleBossier

Floyd/Conasauga/Neal

Chattanooga

U.S. Manufacturing

Natural Gas: 27%Electricity: 13%Liquefied Petroleum: 11%Coal: 8%

Eagle FordFuel Oil: 2%Other : 39%

Note: Oil Prices are West Texas Intermediate light crude spot price (NYMEX).

GLOBAL PERSPECTIVES

ource: vance esources, o tc ov 2002 1999, a n, 1994 art u s ng, 2008 mo e rom nergy roup

Source: U.S. Dept of Energy, FactSetSource: Census Bureau, http://upload.wikimedia.org/wikipedia/commons/b/b4/Plate_tectonics_map.gif

Economy

64

Tectonic Shift Trade


68/90

A growing economy fuels demand for imports; the trade deficit hit a 10-year low in the great recession as demanddwindled. Exports recently reached their highest level ever at $180 billion.

(10)

0 250

Trade Deficit

$USD billions $USD billions

Recessions

(30)

(20) 200

Imports

(left axis)

HighestExport Level

FEB 12$181B

(50)

(40)

100

(70)

50

Exports(right axis)

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GLOBAL PERSPECTIVES

65Source: FactSet

Economy

Long-Run Correlation (since 1990)


69/90

Return correlations below 1.0 indicate ways to combine investments and reduce overall risk; negative or near zerocorrelations offer the best diversification benefits.

Std Dev Cash Bonds Int Bnds Lg Cap Sm Cap Intl Eq Emg Eq REITS Hdge Fds

Cash 0.61 1.00 0.05 (0.10) 0.03 (0.03) 0.00 (0.06) (0.05) 0.09

Bonds 3.74 1.00 0.48 0.13 0.02 0.10 0.00 0.17 0.03

Int Bnds 8.62 1.00 0.16 0.09 0.42 0.15 0.24 0.12

g ap . . . . . . .Sm Cap 19.75 1.00 0.66 0.70 0.66 0.82

Intl Eq 17.72 1.00 0.73 0.51 0.75

Emg Eq 24.22 1.00 0.46 0.82

REITS 20.52 1.00 0.45

Indices:Cash 3 Month T-Bill

Bonds Barclays Aggregate

Sm Cap Russell 2000

Intl Eq MSCI EAFEIntl FI Barclays Global Agg ex-US

Lg Cap S&P 500

Emg Eq MSCI Emerging Equity

REITS FTSE NAREIT US

Hdge Fds HFRI Composite

Hdge Fds 7.08 1.00

Note: Correlation coefficients describe the degree to which two variables are related, ranging from -1 to +1. Larger values (positive or negative) indicatestronger correlation, with +1 indicating the variables tend to move together and -1 indicating the variables move opposite one another. Zero correlation

GLOBAL PERSPECTIVES

66

Allocation

. - ,which goes back 12 years. Standard deviations are calculated based on monthly data that is annualized.

Source: Barclays Capital, MSCI, Russell Investments, Standard & Poors, Citigroup, FTSE, NAREIT, HFR, FactSet

Mutual Fund Flows


70/90

Early 2012 bond flows were the strongest in 18 months while net outflows from domestic equity funds show thatinvestors remain spooked by market volatility.

millions USD 2012 2011 2010 2009 2008 2007

Asset Class Flows

Total Equity (18,744) (164,174) (28,765) (9,056) (234,387) 90,816

Domestic (33,833) (168,746) (87,739) (39,666) (151,749) (47,791)

Foreign 15,088 4,572 58,975 30,613 (82,635) 138,609

Hybrid 25,709 44,969 23,522 22,764 (18,414) 24,162

Total Bond 112,444 174,747 246,000 376,137 27,593 108,768

Taxable 94,390 177,903 234,817 307,052 19,773 97,895

Municipal 18,054 (3,159) 11,183 69,086 7,820 10,874

Total 119,412 55,541 240,756 389,847 (225,209) 223,749

AUM

Money Market 2,582,314 2,694,825 2,814,001 3,302,793 3,840,054 3,122,000

Change YTD (112,511) (119,176)

GLOBAL PERSPECTIVES

67Source: Investment Company Institute (ICI)

Allocation

Alternative Investment Returns


71/90

Alternative Asset Class YTD 2011 2010 2009 2008 2007 2006 1 Year 3 Year 5 Year 10 Year

Hed e Funds as of 3/31/12

CSFB/Tremont HF Index 4.0 (2.5) 10.9 18.6 (19.1) 12.6 13.9 (0.8) 9.8 3.3 6.8

Distressed 5.9 (4.2) 10.3 20.9 (20.5) 8.4 15.6 (1.2) 11.0 2.2 7.8

Convertible Arbitrage (4.9) 1.1 11.0 47.3 (31.6) 5.2 14.3 1.5 17.2 3.9 5.4

. . . . . . . . . . .

Global Macro 1.6 6.4 13.5 11.6 (4.6) 17.4 13.5 7.4 10.1 8.3 10.5

Long/Short Equity 7.2 (7.3) 9.3 19.5 (19.8) 13.7 14.4 (2.9) 8.9 2.7 6.8

Real Estate (as of 3/31/12)

NCREIF Property Index 2.6 14.3 13.1 (16.9) (6.5) 15.8 16.6 13.1 (4.2) 3.5 7.4

Apartment 2.8 15.5 18.2 (17.5) (7.3) 11.4 14.6 18.2 (3.3) 2.9 7.4Industrial 2.7 14.6 9.4 (17.9) (5.8) 14.9 17.0 9.4 (5.4) 2.6 6.8

Office 2.3 13.8 11.7 (19.1) (7.3) 20.5 19.1 11.7 (5.7) 3.8 6.4

Retail 2.8 13.8 10.8 (10.9) (4.1) 13.5 13.3 10.8 (1.8) 4.0 9.8

Equity (as of 4/30/12)

S&P 500 11.9 2.1 15.1 26.5 (37.0) 5.5 15.8 4.8 19.4 1.0 4.7

Note: All returns are annual returns except year-to-date (YTD) returns above. When considering alternative investments, investors should consider

U.S. REIT 12.8 4.7 23.5 21.0 (41.5) (20.2) 30.2 6.0 26.9 (4.2) 7.2

Global REIT 7.5 1.7 23.4 33.7 (45.0) (11.1) 38.8 2.8 36.3 (3.7) 10.3

GLOBAL PERSPECTIVES

68

various risks including the use of leverage and other speculative investment practices, illiquid instruments, and complex tax structures. These

investments are intended for sophisticated investors only, as defined by law. All investing involves substantial risk of loss.Source: CSFB/Tremont, NCREIF, Standard & Poors, Bloomberg

Allocation

Long-term Capital Market Results


72/90

Consistent with capital market theory, stocks have outdistanced bonds, and small-cap stocks have substantiallyoutperformed large-cap stocks for many years.

Recessions

1000U.S. Stock and Bond Returns and Economic Shocks

Small-Cap Stocks

Log

100

$1

Large-Cap Stocks

Corporate Bonds

10

Grow

tho

f

1

.1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

GLOBAL PERSPECTIVES

69Source: FactSet

Allocation

Global Asset Allocation Effective DiversificationS


73/90

A broadly diversified global strategy produced better performance with lower risk than U.S. large-cap and EAFEequities plus corporate bonds.

BarclaysAggregate Corp

20%

SP50010%

Mid Cap

GlobalAggregate

Bonds

High YieldBonds10%

MSCI EAFE10%

10%

Small Cap10%

US TreasuryBonds 20+

10%

SP50070% REIT

10%

BarclaysAggregate

CorpMSCI EAFE

10%MSCI BRIC

10%

10%

Annual Return 8.31%Annual Return 7.08%

Index returns for the period 1995-2011 (YTD): S&P 500, S&P400 Midcap, S&P600 Smallcap, MSCI EAFE, MSCI BRIC, Barclays Capital U.S. Corporate

Standard Deviation 11.92%Standard Deviation 14.60%

GLOBAL PERSPECTIVES

70

, . . , , . . ., .illustration only. Past performance is not a guarantee of future results. Investors cannot invest directly in an index.

Source: FactSet. Returns data from 9/30/1995-12/30/2011.

Allocation


74/90

Effect of Combining Risky AssetsA portfolio of risky assets may have less risk than might be expected at first glance Assets should be evaluated on


75/90

A portfolio of risky assets may have less risk than might be expected at first glance. Assets should be evaluated on

their contribution to the overall portfolio, not in isolation.

Annualized Returns and Risks (%)

Risky Asset Return Risk

U.S. Small-cap 8.4 24.716

18Diversification Benefits Portfolio Return/Risk Ratio

InternationalEquities

6.6 17.0

Global REITS 12.2 20.7

Emer in10

12

14

eRe

turn

%

Market Equities

16.5 30.1

Other asset classesnot included in the analysis:

6

8Avera

U.S. Large-cap 4.5 17.0

U.S. Bonds 6.0 4.0

416 18 20 22 24 26 28 30 32

Annualized Risk %

1-Asset 2-Assets 3-Assets 4-Assets Log. (1-Asset)

Note: The analysis includes returns for the Russell 2000 Small-cap Index, MSCI EAFE International Index, NAREIT REIT Index and MSCI Emerging MarketsEquity index for the period January 1995 June 2011. Hypothetical 2-, 3- and 4- asset portfolios were created based on equal weighting of the included assets.The return for each portfolio (vertical axis) is the average annualized return over the measurement period. The risk (horizontal axis) equals the annualizedstandard deviation for the period. Standard deviation measures dispersion around the average return, indicating whether the returns tend to be close to theaverage or spread over a wide range. The dotted line ellipses represent theoretical attainable sets of other portfolios of those assets with different assetweightings. As more assets are added to the hypothetical portfolios, historically risk tends to decline. For illustration purposes only. Past performance is not a

GLOBAL PERSPECTIVES

72

guarantee o uture resu ts. nvestors cannot nvest rect y n an n ex. vers cat on oes not guarantee aga nst a oss an t ere s no guarantee t at adiversified portfolio will consistently outperform a non-diversified portfolio.Source: ING Investment Management, FactSet.

Allocation

Benefits of Portfolio RebalancingOver 35 years regular rebalancing increased returns and reduced risk compared to a buy and hold approach which


76/90

Over 35 years, regular rebalancing increased returns and reduced risk compared to a buy and hold approach, which

allows allocations to drift away from the intended targets.

Rebalanced

60/40 Average AllocationValue: $2.9 million

Buy and Hold

72/28 Average AllocationValue: $2.7 million

Initial Portfolio

60/40 AllocationValue: $100,000

Barclays CapitalAggregate Bonds

S&P 500Stocks

Return 9.88%

Risk 9.90%

Return 9.67%

Risk 11.70%

Note: Based on index return data for the period 1/31/1976-9/30/2011, compounded annually. Initial hypothetical portfolios comprised of 60% S&P 500, 40%Barclays Capital U.S. Aggregate Bonds with rebalancing for the rebalanced portfolio on a quarterly basis. Risk equals historical annualized standard

GLOBAL PERSPECTIVES

73

ev at on. or ustrat on on y. ast per ormance s not a guarantee o uture resu ts. nvestors cannot nvest rect y n an n ex. ort o o re a anc ng mayinclude trading costs and fees.Source: FactSet, ING Investment Management.

Allocation

Cash on the Sidelines and Equity Fund Flows vs. Stock PricesThe excess of M2 over M1 money supply data show record levels of cash on the sidelines while flows into and out


77/90

The excess of M2 over M1 money supply data show record levels of cash on the sidelines, while flows into and out

of equity mutual funds exhibit extreme swings that reflect stock market performance.

60 2,000

7,000

8,000 $7.5 trillionin cash onthe sidelines

$ billions

$ millions

Extreme inflows atthe top of the market

Equity Fund Flows vs. Stock Prices

Index value

20

40

1,600

5,000

6,000

Money Supply M2-M1Equity Fund Flows

-20

0 1,200

3,000

4,000

S&P Index

-40

800

1,000

2,000 Retail Money Market Funds

Institutional Money Markets

Extreme outflowsat the bottom of

the market

1998 2000 2002 2004 2006 2008 2010 2012-60 400

1994 1998 2002 2006 2010

GLOBAL PERSPECTIVES

74

Allocation

Note: M2 minus M1 includes all savings deposits and retail money market funds and excludes currency, coins and checking account balances.Source: FactSet

Life ExpectancyImproving life expectancy for those of all ages means the probability of living many years in retirement is higher than


78/90

Improving life expectancy for those of all ages means the probability of living many years in retirement is higher than

most people realize.

Life Expectancy Before Retirement

65%

Probability of Long Life at Age 65

.

40.0

31.0

46%

22.5

18.6

26%

30 40 50 60 65 80 85 90

Age Age

GLOBAL PERSPECTIVES

75Source: Table B. Expectation of life by age, sex, Hispanic origin and race for non-Hispanic population, United States, 2007, National Vital Statistics Reports,Vol. 59, No. 9, September 28, 2011.

Retirement

Retirement Plan Funding, Sponsorship, ParticipationDeclining funding and sponsorship of pension plans is shifting the burden of retirement savings to participants in


79/90

Declining funding and sponsorship of pension plans is shifting the burden of retirement savings to participants in

defined contribution plans.

500

600

700DB Plan Sponsors in Fortune 1000

No Frozen Plans

ponsors

Funded, 7.6%Underfunded,

Funded Status of DB Plansfor S&P 500 Companies, 2011 Forecast

0

100

200

300

Frozen Plans

Numberof

.

2004 2005 2006 2007 2008 2009 2010 2011

90Retirement Plan Participation, Medium and Large Companies

50

60

70

80

art

icipa

ting

Defined Benefit

20

30

40

1985 1989 1995 2000 2005 2010

%

Defined Contribution

GLOBAL PERSPECTIVES

76Source: Top: Towers Watson. Bottom: Employee Benefit Research Institute, U.S. Department of Labor, Bureau of Labor Statistics, National CompensationSurvey: Employee Benefits in Private Industry in the United States, March 2004 March 2010, Bureau of Labor Statistics, 2004-2010.

Retirement

Major Sources of Retirement IncomeTodays workers expect to rely more on personal sources of retirement income, such as their savings plan and IRA,


80/90

y p y p , g p ,

than is presently the case for those over 65.

Expected Sources Percent (%)

Employer-sponsored saving plan 44Earnings

Actual Sources of Retirement Income 2009, Age 65 and Over

Social Security 33

Employer traditional pension 29

Individual Retirement Account 29

SocialSecurity

42%

28%

er sav ngs an nves men s

Continued Employment 24

Personally-owned guaranteed income products 14 Incomefrom

Pensionsand

Annuities

Assets11%

19%

GLOBAL PERSPECTIVES

77Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1993-2011 Retirement Confidence Surveys, ebri.org Issue Brief,March 2011, No. 355. EBRI Databook on Employee Benefits, estimates from Current Population Survey, U.S. Census Bureau, March 2010 Supplement.

Retirement

Savings Rates and Household Net WorthLower personal savings rates and household net worth increase the burden that future savings must bear to achieve


81/90

p g g

retirement security.

60

70

8

10 3 month average,% of disposableincome

Most recent data: 12/30/11$ trillionsMost recent data: 2/29/12

Household wealthhas likely stabilized

506

.

30

40

2

4.

200Since reaching a bottom at 1%in 2008, the savings ratehas moved unevenly higher.

1988 1991 1994 1997 2000 2003 2006 2009 20121988 1991 1994 1997 2000 2003 2006 2009 2012

GLOBAL PERSPECTIVES

78Source: Bureau of Economic Analysis, Federal Reserve, FactSet.

Retirement

Savings Needed for RetirementAmong workers who reported, total savings and investments not including their personal residence or defined


82/90

benefit plans are far less than what they will need to retire.

31

30

35

Amount Needed at Retirement:Estimated Weighted Average: $567,000

46

45

50

Reported Total Savings and Investments:75% have saved < $100,000

19

22

20

25

t(%)

30

35

40

nt(%)

1010

15

P

ercen

11

14

1115

20

25

Perc

0

5

- - -

9

0

5

10

- - - -- -1,000

, -1,500

, - - -100k

-250k

GLOBAL PERSPECTIVES

79

ource: mpoyee ene t esearc nst tute an at ew reenwa & ssoc ates, nc., 2011 etrement on ence urvey, e r .org ssue r e , arc2011, No. 355, Figure 26, Amount of Savings Workers Think They Need for Retirement, including data only for those who responded (88%), Figure 3,

Reported Total Savings and Investments, Among Those Providing a Response.

Retirement

Confidence in the FutureThe percentage of workers who are very confident about the financial aspects of retirement has slipped substantially


83/90

in the past ten years.

37342001

Percentage of Workers Very Confident in Financial Aspects of Retirement

22

2728.0

22.0

29.0

13.0

Live comfortably Enough for basic expenses Doing a good job of preparing

for retirement

Confidence that social security

will rovide benefits of e ualvalue

GLOBAL PERSPECTIVES

80

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey, ebri.org Issue Brief, March

2011, No. 355, Figure 7, Percentage of Workers Very Confident in Financial Aspects of Retirement, selected retirement responses.

Retirement

Capital Market ReturnsCapital market returns vary widely over time, making asset allocation decisions difficult and successful market timing


84/90

virtually impossible.

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

BC U.S. MSCI EM NAREIT/REIT MSCI EM NAREIT/REIT MSCI EAFE BC U.S. MSCI EM NAREIT/REIT BC U.S.

10.3% 55.8% 31.6% 34.0% 35.1% 11.6% 5.2% 78.5% 28.0% 7.8%

NAREIT/REIT R2000 MSCI EM MSCI EAFE MSCI EM BC U.S. T-Bill MidCap R2000 NAREIT/REIT

3.8% 47.3% 25.6% 14.0% 32.2% 7.0% 1.6% 40.5% 26.9% 4.7%

T-Bill MidCap MSCI EAFE MidCap MSCI EAFE Balanced Balanced MSCI EAFE MidCap Balanced

1.7% 40.1% 20.7% 12.7% 26.9% 6.2% -22.1% 32.5% 25.5% 4.4%

MSCI EM MSCI EAFE MidCap NAREIT/REIT R2000 MidCap R2000 NAREIT/REIT MSCI EM SP500

-6.2% 39.2% 20.2% 12.2% 18.4% 5.6% -33.8% 28.0% 18.9% 2.1%

-

-9.8% 37.1% 18.3% 4.9% 15.8% 5.5% -37.0% 27.2% 15.1% 0.0%

MSCI EAFE SP500 SP500 R2000 MidCap T-Bill NAREIT/REIT SP500 Balanced MidCap-15.7% 28.7% 10.9% 4.6% 15.3% 4.7% -37.7% 26.5% 12.1% -1.5%

MidCap Balanced Balanced Balanced Balanced R2000 MidCap Balanced MSCI EAFE R2000

-16.2 18.5% 8.3% 4.0% 11.1% -1.6% -41.5% 18.4% 8.2% -4.2%

R2000 BC U.S. BC U.S. T-Bill T-Bill NAREIT/REIT MSCI EAFE BC U.S. BC U.S. MSCI EAFE

-20.5% 4.1% 4.3% 3.0% 4.8% -15.7% -43.1% 5.9% 6.5% -11.7%

SP500 T-Bill T-Bill BC U.S. BC U.S. MSCI EM MSCI EM T-Bill T-Bill MSCI EM

-22.1% 1.0% 1.2% 2.4% 4.3% -39.4% -53.3% 0.1% 0.1% -18.2%

NAREIT/REIT = NAREIT Equity REIT T-Bill = U.S. 30-day T-Bill BC Agg. = Barclays Capital U.S. Aggregate Bond Index

MSCI EM = MSCI Emerging Markets - Net R2000 = Russel l 2000 Index Balanced = 60% S&P 500, 40% BC Aggregate

Midcap = Russell Midcap Index SP500 = S&P 500 MSCI EAFE = MSCI EAFE USD

GLOBAL PERSPECTIVES

81

Note: For illustration only. Past performance is not a guarantee of future results. Investors cannot invest directly in an index.

Source: FactSet, ING Investment Management.

Retirement

Asset Allocation by Participant AgeAs participants age, declining equity and increasing fixed income allocations make reported allocations appear to be


85/90

rational if not optimal.

50.050

60 Average Asset Allocation of 401(k) Accounts byParticipant Age 2009

39.2

33.731.8

30

40

20.9 19.6

10.17.1

10.8 10.3

15.9

7.77.89.4 9.8

4.310

20

. .

0Equity Target Date Other Balanced Stable Value Bonds Money Market

GLOBAL PERSPECTIVES

82

Note: Dollar weighted averages, omits minor investment options, may not sum to 100 due to rounding.

Source: EBRI/ICI Participant-Directed Plan Data Collection Project.

Retirement

Maintaining Purchasing PowerRetirees face the risk of shrinking real purchasing power; on average, small-cap stocks have been a good inflation


86/90

hedge; cash is a poor choice.

Recessions16

)

Real Rates of Return Over Average Life Expectancy at Age 651982 2011

ew grap1012ofReturn(%

2

4

6

ualized

Rate

ma - ap oc s

Large-Cap Stocks

Corporate Bonds

(4)

(2)

0An Cash

Rate of Inflation

Note: Return data for the S&P 500 Index, Russell 2000 Small-cap Index, Barclays Capital U.S. Corporate Bond Index and the 30-day U.S. T-Bill index for

1982 1986 1990 1994 1999 2003 2007 2011

GLOBAL PERSPECTIVES

83

ro ng 18.5-year per o s rom 1963-2011. a cu ate as t e compoun annua ze return n excess o t e rate o n at on or eac asset c ass. e rate oinflation is based on the monthly reported change in the Consumer Price Index (CPI).

Source: FactSet, ING Investment Management.

Retirement

Fund Flows in DC PlansFund flows show the tendency of investors to remain risk averse long after market downturns in ways that may

d i h i l l h l i l


87/90

undermine their long-term wealth accumulation goals.

Estimated Net New Cash Flows to DC Retirement Plans ($billions)

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 201010-Year

Total% ofTotal

Equities 63 20 74 92 52 68 16 -124 -22 -25 214 20%

Hybrid(Balanced)

19 16 37 57 75 59 95 32 41 51 482 45%

Bonds 36 54 8 3 13 15 28 31 90 52 330 31%

MoneyMarket

31 20 -30 -31 1 32 59 82 -70 -50 44 4%

Total 150 110 88 120 139 174 198 21 40 28 1068 100%

S&P 500Return

-11.9% -22.1% 28.7% 10.9% 4.9% 15.8% 5.5% -37.0% 26.5% 15.1%

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Retirement

Note: Includes both 401(k) and IRA plans. Components may not add to the illustrated total due to rounding.

Source: Investment Company Institute, ING Investment Management.


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Important Disclosures

This information has been prepared by ING InvestmentM f i f i l N hi i d h i The views and judgments expressed are those of ING Investment


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This information has been prepared by ING InvestmentManagement for informational purposes. Nothing contained herein The views and judgments expressed are those of ING InvestmentManagement. They are subject to change at any time. These views

buy any security or (ii) a recommendation as to the advisability ofinvesting in, purchasing or selling any security. Certain of thestatements contained herein are statements of future expectationsand other forward-looking statements that are based onmanagement's current views and assumptions and involve known

.

All investing involves risks of fluctuating prices and the uncertaintiesof rates of return and yield inherent in investing. All securitytransactions involve substantial risk of loss.

You should consult your tax, legal, accounting or other advisors

and unknown risks and uncertainties that could cause actualresults, performance or events to differ materially from thoseexpressed or implied in such statements. Actual results,performance or events may differ materially from those in suchstatements due to, without limitation, (1) general economicconditions, (2) performance of financial markets, (3) interest rate

about the matters discussed herein.As indicated on each page, some information was obtained fromoutside sources and is believed to be reliable, but ING does notguarantee its completeness or accuracy.

levels and (4) increasing levels of loan defaults (5) changes in lawsand regulations and (6) changes in the policies of governmentsand/or regulatory authorities.

All indexes are unmanaged and an individual cannot invest directlyin an index. Index returns do not include fees or expenses.

Not FDIC Insured; no bank guarantee; may lose value

Past performance is no guarantee of future results.

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CID3520

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