PrincipalFinancialAdvisors,Inc. May 2010 Mr. Mark Antonio City of Hallandale Beach City Hall 400 South Federal Highway Hallandale Beach, FL 33009-6433 RE: City of Hallandale Beach General Employees' Retirement Plan Contract No: 4-45661 Dear Mr. Antonio, Thank you for being a continuing client of Principal Financial Advisors. Enclosed is a copy of your Investment Advisory Report. We are pleased to continue working with you and hope that you find this summary helpful. Principal Financial Advisors, Inc., is a registered investment adviser and wholly owned subsidiary of the Principal Financial Group®. Federal securities laws require us to offer you a copy of Principal Financial Advisors ADV Part 2. This filing provides information about Principal Financial Advisors and the services we offer. Please let me know if you would like a copy of the ADV Part 2. Please contact me at the number below if you have any questions regarding this report. Best regards, CC Don Huegerich P.O.Box9397,DesMoines,Iowa50306-93971(800)543-4015 AmemberofthePrincipalFinancialGroup® ComplianceApprovalNo.122322007 Principal Financial Advisors, Inc. Investment Advisory Report City of Hallandale Beach General Employees' Retirement Plan Contract No. 4-45661 October 01, 2009 - March 31, 2010 Contents Page 1 PrincipalFinancialAdvisors,Inc.Overview 2 PortfolioandStrategicAssetAllocationReview 5 International Holdings 11 PortfolioPerformanceReview 12 MarketCommentaryandUpdates 21 InvestmentOptionPerformance 36 Fact Sheets Principal Financial Advisors, Inc. Overview Makinginformedandeffectiveassetallocationdecisionsmaybeoneofthemostimportant–andchallenging–endeavorsanemployer undertakesfortheirretirementplan.Thisdecisioniskeyindeterminingwhethertheplanwillmeetitslong-terminvestmentgoalsandobjectives. AtthePrincipalFinancialGroup®(ThePrincipal®),weunderstandthechallengesandpressuresemployersfaceasaretirementplansponsor, includingtheselectionofoptimalinvestmentoptions. Forover20years,PrincipalFinancialAdvisors,Inc.,aregisteredinvestmentadvisor,andamembercompanyofthePrincipalFinancialGroup® hasbeenprovidingassetallocationsolutionsforclients.AsofMarch31,2010,wemanage$5.5billioninassetsoverallandhavemorethan400 clientsusingouradvisoryservicesforretirementplans. Ourmissionistoprovidehighqualityinvestmentadvisoryandconsultingservicestohelpclientsmeettheirgoalsandobjectivesbyoffering premierinvestmentmanagersandcustomizedassetallocationsolutions. TheinvestmentadvisoryservicesofPrincipalFinancialAdvisors,Inc.,areconsistentwiththefollowingcorebeliefs: 1)Strategicassetallocationdecisionsarekeydeterminantsofinvestorsuccess. 2)Liabilityanalysisandplansponsorattributesdictateassetallocationdecisionsfordefinedbenefitplans. 3)Diversificationbyassetclass,style,andmanageristheprimarytoolforlimitinginvestmentrisk. 4)Valueisaddedthroughmanagerselection. PrincipalFinancialAdvisors,Inc.,provides: SM 1)BenefitsofthePrincipalDueDiligenceProgram providedbyPrincipalLifeInsuranceCompany. 2)Assetliabilityanalysisfordefinedbenefitplansandscenariostohelpmeetyourplan'sgoals. 3)Assumptionoffiduciaryresponsibilityforassetallocationdecisions.* 4)Experiencedinvestmentpersonnel. 5)Comprehensivereportingandtop-tierclientservice. PrincipalFinancialAdvisors,Inc.,focusesonlong-termassetallocationstrategieswiththegoalofprovidingoptimalreturnandrisk scenariostohelpmeetyourdefinedbenefitplan’sgoals. *Theplansponsorremainsthenamedfiduciaryoftheplan,butPrincipalFinancialAdvisors,Inc.,hasbeenselectedastheplan'sinvestmentadvisor. Page 1 Portfolio and Strategic Asset Allocation Review InvestmentReview-Allocation10/01/2009through03/31/2010 Investment Beginning Ending Advisor InvestmentOption Balance Breakdown% Balance Breakdown% LargeU.S.Equity LargeValue 3,17,22,33,43 AllianceBernstein/Westwood LargeCapValueIIISeparateAccount-R6 $1,159,735 4.54% $1,333,536 4.87% 15,43,47 UBS/TS&W LargeCapValueISeparateAccount-R6 $2,164,501 8.48% $2,462,546 9.00% LargeBlend 2,9,24 PrincipalGlobalInvestors LargeCapS&P500IndexSeparateAccount-R6 $1,424,311 5.58% $1,638,319 5.98% LargeGrowth 25 ColumbusCircleInvestors LargeCapGrowthSeparateAccount-R6 $1,669,876 6.54% $1,945,427 7.11% 3,43,45 T.RowePrice/BrownAdvisory LargeCapGrowthISeparateAccount-R6 $1,657,709 6.49% $1,942,113 7.09% Small/MidU.S.Equity MidCapValue 1,13,26 PrincipalGlobal/BarrowHanley MidCapValueIIISeparateAccount-R6 $388,645 1.52% $463,701 1.69% MidCapGrowth 1,12,27,43 Turner/Mellon/JacobsLevy MidCapGrowthIIISeparateAccount-R6 $388,944 1.52% $460,969 1.68% SmallValue 1,15,37,40,43 DFA/VaughanNelson/LACapital SmallCapValueIISeparateAccount-R6 $385,177 1.51% $455,873 1.67% SmallGrowth 1,3,43,44 Emerald/Essex SmallCapGrowthIISeparateAccount-R6 $387,452 1.52% $441,838 1.61% InternationalEquity DiversifiedEmergingMarkets 4 PrincipalGlobalInvestors InternationalEmergingMarketsSeparateAccount-R6 $312,488 1.22% $353,298 1.29% ForeignLargeValue 4,15,43 AXARosenberg/Causeway InternationalValueISeparateAccount-R6 $852,438 3.34% $900,049 3.29% ForeignLargeBlend 4,15,19,31,43,48 Fidelity/Schroders InternationalISeparateAccount-R6 $877,451 3.44% $930,280 3.40% ForeignLargeGrowth 3,4 PrincipalGlobalInvestors InternationalGrowthSeparateAccount-R6 $848,568 3.32% $946,601 3.46% RealEstate OwnedRealEstate 6 PrincipalRealEstateInv U.S.PropertySeparateAccount-R6 $994,562 3.89% $948,326 3.46% RealEstate 3,8 PrincipalRealEstateInv RealEstateSecuritiesSeparateAccount-R6 $385,636 1.51% $475,702 1.74% FixedIncome HighYieldBond 5,15,18,20,21,32 JPMorgan/NeubergerBerman HighYieldISeparateAccount-R6 $1,381,396 5.41% $1,579,619 5.77% Page 2 Portfolio and Strategic Asset Allocation Review InvestmentReview-Allocation10/01/2009through03/31/2010 Investment Beginning Ending Advisor InvestmentOption Balance Breakdown% Balance Breakdown% Intermediate-TermBond 15,18,21 PIMCO CorePlusBondISeparateAccount-R6 $4,265,357 16.70% $4,534,274 16.56% 18,21 PrincipalGlobalInvestors BondandMortgageSeparateAccount-I2 $4,270,372 16.72% $3,738,429 13.66% Inflation-ProtectedBond 15,18,21,34 BlackRockFinancialMgmt,Inc. InflationProtectionSeparateAccount-R6 $1,722,934 6.75% $1,824,573 6.66% TOTAL $25,537,552 100% $27,375,473 100% Pleaseseeimportantdisclosuresattheendofthispresentation. Page 3 Portfolio and Strategic Asset Allocation Review AssetClassBreakdown Beginning%AsOf10/01/2009 Ending%AsOf03/31/2010 LargeU.S.Equity Small/MidU.S.Equity InternationalEquity RealEstate FixedIncome Page 4 Holdings of International Separate Accounts by Region as of March 31, 2010 Asia 6.511% Latin America 2.368% China 1.665% Argentina - India 0.670% Bermuda - Indonesia 0.300% Brazil 1.786% Malaysia 0.136% British Virgin Islands 0.005% Pakistan - Cayman Islands - 2.057% 6.511% Philippines 0.056% Chile 0.135% South Korea 2.332% Colombia - Taiwan 1.352% Mexico 0.361% Thailand - Peru 0.081% 27.772% Europe 60.040% North America 1.253% Austria 0.048% Canada 0.727% Belgium 1.197% United States 0.526% Denmark 1.166% Finland 0.707% Pacific 27.772% 1.253% France 9.572% Australia 5.291% 2.368% Germany 7.598% Hong Kong 2.352% 60.040% Greece 0.693% Japan 18.853% Ireland 0.490% New Zealand 0.014% Italy 2.566% Singapore 1.262% Luxembourg 0.243% Asia Europe Netherlands 4.295% Medit. / Africa / ME 2.057% Latin America North America Norway 0.666% Cyprus - Pacific Medit. / Africa / ME Portugal 0.475% Czech Republic 0.103% Spain 3.573% Egypt - Sweden 1.847% Hungary - Switzerland 7.078% Iceland - United Kingdom 17.827% Israel 0.262% Morocco - Poland 0.099% Russia 0.542% Slovenia - South Africa 0.814% Turkey 0.236% Page 5 Portfolio and Strategic Asset Allocation Review Thetablebelowillustratestheplan'stargetallocationfor new contributions atthebeginningandendofthereportingperiod. Yourplan'sassetsandliabilitiesarereviewedperiodicallyduringtheyearandwemakechangesasneeded.Wewillcontinuetomonitoryourplan andadjustitsallocationasnecessary. TargetAllocation10/01/2009through03/31/2010 Investment Beginning Ending Advisor InvestmentOption Allocation Allocation LargeU.S.Equity 31.30% 31.30% LargeValue 3,17,22,33,43 AllianceBernstein/Westwood LargeCapValueIIISeparateAccount-R6 4.50% 4.50% 15,43,47 UBS/TS&W LargeCapValueISeparateAccount-R6 8.40% 8.40% LargeBlend 2,9,24 PrincipalGlobalInvestors LargeCapS&P500IndexSeparateAccount-R6 5.50% 5.50% LargeGrowth 25 ColumbusCircleInvestors LargeCapGrowthSeparateAccount-R6 6.50% 6.50% 3,43,45 T.RowePrice/BrownAdvisory LargeCapGrowthISeparateAccount-R6 6.40% 6.40% Small/MidU.S.Equity 6.00% 6.00% MidCapValue 1,13,26 PrincipalGlobal/BarrowHanley MidCapValueIIISeparateAccount-R6 1.50% 1.50% MidCapGrowth 1,12,27,43 Turner/Mellon/JacobsLevy MidCapGrowthIIISeparateAccount-R6 1.50% 1.50% SmallValue 1,15,37,40,43 DFA/VaughanNelson/LACapital SmallCapValueIISeparateAccount-R6 1.50% 1.50% SmallGrowth 1,3,43,44 Emerald/Essex SmallCapGrowthIISeparateAccount-R6 1.50% 1.50% InternationalEquity 11.20% 11.20% DiversifiedEmergingMarkets 4 PrincipalGlobalInvestors InternationalEmergingMarketsSeparateAccount-R6 1.20% 1.20% ForeignLargeValue 4,15,43 AXARosenberg/Causeway InternationalValueISeparateAccount-R6 3.30% 3.30% ForeignLargeBlend 4,15,19,31,43,48 Fidelity/Schroders InternationalISeparateAccount-R6 3.40% 3.40% ForeignLargeGrowth 3,4 PrincipalGlobalInvestors InternationalGrowthSeparateAccount-R6 3.30% 3.30% RealEstate 1.50% 1.50% RealEstate 3,8 PrincipalRealEstateInv RealEstateSecuritiesSeparateAccount-R6 1.50% 1.50% Page 6 Portfolio and Strategic Asset Allocation Review TargetAllocation10/01/2009through03/31/2010 Investment Beginning Ending Advisor InvestmentOption Allocation Allocation FixedIncome 50.00% 50.00% HighYieldBond 5,15,18,20,21,32 JPMorgan/NeubergerBerman HighYieldISeparateAccount-R6 5.30% 5.30% Intermediate-TermBond 15,18,21 PIMCO CorePlusBondISeparateAccount-R6 19.00% 19.00% 18,21 PrincipalGlobalInvestors BondandMortgageSeparateAccount-I2 19.10% 19.10% Inflation-ProtectedBond 15,18,21,34 BlackRockFinancialMgmt,Inc. InflationProtectionSeparateAccount-R6 6.60% 6.60% Pleaseseeimportantdisclosuresattheendofthispresentation. Page 7 Portfolio and Strategic Asset Allocation Review Pleasenotethataslightvariancebetweenyourplan'stargetallocation for new contributionsdisplayedinthisreportanditsweightingsisnormal. BeginningTargetAllocationAsOfOctober01,2009 EndingTargetAllocationAsOfMarch31,2010 LargeU.S.Equity Small/MidU.S.Equity InternationalEquity RealEstate FixedIncome Page 8