presentation materials - fairfax county public schools - suppl pres... · anxious after several key...

Visit the Aon Retirement and Investment Blog (http://retirementandinvestmentblog.aon.com); sharing our best thinking.

Fairfax County Public Schools | Third Quarter 2018

Presentation Materials

Contact Information

Gregory J. Fox, CFA Senior Consultant

Aon Hewitt Investment Consulting, Inc.

201 Merritt 7, STE 2

Norwalk, CT 06850

t +1 (203) 523-8780

f +1 (847) 953-2192

[email protected]

Matthew C. Stone Consultant



Norwalk, CT 06850

t +1 (203) 523-8929

f +1 (203) 523-6750

[email protected]

Connor Keenan Investment Analyst



Norwalk, CT 06850

t +1 (203) 523-6195

f +1 (203) 853-2224

[email protected]

mailto:[email protected]



Aon Proprietary & Confidential Investment advice and consulting services provided by Aon Hewitt Investment Consulting, Inc., an Aon Company.

Trade negotiation developments were keenly watched in Q3 2018. A last-minute compromise in the U.S.-Canada trade negotiations late in the quarter looks set to pave the way for the U.S.-Mexico-Canada (USMCA) agreement to be ratified by all three member governments towards the end of this year. However, U.S.-China trade relations continued to deteriorate. Despite this, global equities returned 3.9% in Q3 2018.

U.S. equities continued to perform well in Q3 2018. This was supported by encouraging earnings and upbeat US economic data, with real GDP growth hitting 4.2% (year-on-year) and the Institute of Supply Management's (ISM) manufacturing index topping 60 once more in September. The combination of strong U.S. economic performance and robust corporate earnings growth elevated U.S. equity markets to new heights with the S&P 500 index hitting record levels.

UK equities fell the most over the quarter is U.S. Dollar terms in a quarter where Brexit negotiations became increasingly anxious after several key elements of the UK Government’s so-called “Chequers” plan for Brexit negotiations were rejected by the European Union (EU). European equities only modestly increased with concerns over the Italian budget and European banks’ exposure to Turkey, which was exposed to a currency and debt crisis, weighing on the market.

Trade war escalations, a strengthening U.S. dollar and concerns over the Chinese economy–all prominent features from the second quarter–were mainstays over Q3 for Emerging Markets (EM) equities. Consequently, EM equities fell 1.5% in U.S. dollar terms over the quarter.

3.9%

0.4%

6.9%

-2.0%

3.0%

0.6%

8.5%

1.5%

-0.7% -1.5%

9.6%

1.8%

17.0%

3.0%

9.7%

1.6%

16.2%

-1.2%

4.1%

-1.2%

-10%

0%

10%

20%

ACWI IMI 45.2%ACWI ex-U.S. IMI

54.8%USA IMI

5.5%UK IMI

8.0%Japan IMI

3.0%Canada IMI

0.2%Israel IMI

13.9%Europe ex-UK IMI

3.7%Pacific ex-Japan

IMI

10.8%Emerging Markets

IMI

GLOBAL MSCI IMI INDEX RETURNSAS OF 09/30/2018

Third Quarter 2018 One-Year

Source: MSCI

Global Equity Markets

Page 1


The two exhibits on this slide illustrate the percentage that each country/region represents of the global and international equity markets as measured by the MSCI All Country World IMI Index and the MSCI All Country World ex-U.S. IMI Index, respectively.

USA54.8%

UK5.5%

Canada3.0%

Pacific ex-Japan3.7%

Japan8.0%

Europe ex-UK13.9%

Israel0.2%

Latin America1.2%

Asia8.1%

Eastern Europe, Middle East & Africa

1.5%

Emerging Markets10.8%

MSCI ALL COUNTRY WORLD IMI INDEXGEOGRAPHIC ALLOCATION AS OF 09/30/2018

Source: MSCI

UK12.2%

Canada6.7%

Pacific ex-Japan8.1%

Japan17.7%

Europe ex-UK30.8%

Israel0.5%

Latin America2.7%

Asia17.9%

Eastern Europe, Middle East & Africa

3.3%

Emerging Markets23.9%

MSCI ALL COUNTRY WORLD EX-U.S. IMI INDEXGEOGRAPHIC ALLOCATION AS OF 09/30/2018

Source: MSCI

Global Equity Markets

Page 2


The Russell 3000 Index returned 7.1% during the third quarter and 17.6% over the one-year period.

All sectors generated positive returns over the quarter. In particular, Healthcare (13.6%) and Producer Durables (9.3%) were the strongest performing sectors in Q3 2018. The Technology sector continued to perform strongly (9.1%) over the quarter supported by very strong earnings for mega-cap technology stocks, such as Amazon, Apple and Microsoft.

Performance was positive across the market capitalization spectrum over the quarter. In general, large cap stocks outperformed both medium and small cap stocks over the quarter. Small cap stocks were led lower by poor performance of Financial and Healthcare stocks.

Growth stocks outperformed their Value counterparts in Q3 2018. Over the last 12 months, Value stocks continued to lag their Growth stock equivalents significantly. The underperformance of Value stocks can be partly attributed to the lower exposure to Technology stocks, which have performed strongly over the last year.

7.1% 6.9%

9.6%

3.3%

7.6%

1.6%

5.5%

17.6%

9.8%

27.9%

8.8%

21.1%

9.3%

21.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Russell3000

30.6%Large Value

36.1%Large

Growth

15.2%MediumValue

10.5%MediumGrowth

3.7%Small Value

3.9%Small

Growth

RUSSELL STYLE RETURNSAS OF 09/30/2018

Third Quarter 2018

One-Year

Source: Russell Indexes

7.1%9.1%

13.6%

6.6%5.2%

0.7%0.9%

9.3%

4.3% 4.6%

17.6%

30.7%

20.2%

27.4%

0.2%

15.2%

4.1%

13.2%11.9%

3.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Russell 3000 21.3%Technology

14.2% Healthcare

14.4%Cons. Disc

5.4%Cons.

Staples

5.7%Energy

3.4% Materials &Processing

10.7%ProducerDurables

20.3%FinancialServices

4.6%Utilities

RUSSELL GICS SECTOR RETURNSAS OF 09/30/2018 Third Quarter 2018

One-Year

Source: Russell Indexes

U.S. Equity Markets

Page 3


The Bloomberg Barclays U.S. Aggregate Bond Index remained flat in the third quarter. Investment grade corporate bonds was the best performer over the quarter at 1.0% whilst government bonds was the worst performer at -0.6%.

Performance was positive across all credit qualities, with the exception of AAA bonds which fell 0.3%, as spreads tightened over the quarter. High yield bonds returned the most at 2.4%. In investment grade bonds, Baa bonds were the major outperformer with a return of 1.4%.

Short maturity bonds outperformed intermediate and long maturity bonds over the quarter. Short maturity bonds returned 0.3% while long maturity bonds fell 0.5% in Q3 2018.

0.0%

-0.6%

1.0%

-0.1%

0.5% 0.5%

-1.2%

-1.6%

-1.2%-0.9%

0.5%

-0.6%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

BarclaysAgg. Bond

41.5%Gov't

26.4%Corp.

29.5%MBS

0.5%ABS

2.0%CMBS

BLOOMBERG BARCLAYS AGGREGATE RETURNS BY SECTORAS OF 09/30/2018

Third Quarter 2018

One-Year

Source: FactSet

0.3%0.1% 0.1%

-0.1%

-0.5%

0.2%

-1.0%-1.2%

-1.6%

-2.7%-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1-3 Yr. 3-5 Yr. 5-7 Yr. 7-10 Yr. >10 Yr.

BLOOMBERG BARCLAYS AGGREGATE RETURNS BY MATURITY AS OF 09/30/2018

Third Quarter 2018

One-Year

Source: FactSet

-0.3%

0.3%0.7%

1.4%

2.4%

-1.3%

-0.6%

-1.6%

-0.8%

3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Aaa Aa A Baa High Yield

BLOOMBERG BARCLAYS U.S. AGGREGATE RETURNSBY QUALITY AND HIGH YIELD RETURNS AS OF 09/30/2018

Third Quarter 2018

One-Year

Source: FactSet

U.S. Fixed Income Markets

Page 4


The yield curve flattened over the quarter with yields rising across maturities. The spread between the 10-year and 2-year U.S. Treasury yield narrowed to 24bps from 33bps. This flattening is very likely signalling bond market caution on economic growth prospects once the U.S. tax stimulus has flowed through.

The US Federal Reserve (Fed) continued to tighten monetary policy, increasing the federal funds rate by 25bps to a range of 2.0-2.25%. While this rate hike now puts U.S. monetary policy above the Fed's preferred measure of inflation, the core Personal Consumption Expenditure price index, for the first time since the financial crisis, the real Fed funds rate (see chart below) is still very low historically and still broadly accommodative.

The recent move in U.S. nominal government bond yields has primarily been driven by real yields, rather than market-implied expectations of future inflation. The 10-year U.S. treasury yield rose by 20bps to 3.05% with 18bps attributable to the increase in the duration-equivalent TIPS yield.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0 5 10 15 20 25 30Maturity (Years)

U.S. TREASURY YIELD CURVE

9/30/2017

6/30/2018

9/30/2018

Source: U.S. Department of Treasury

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Sep 08 Sep 10 Sep 12 Sep 14 Sep 16 Sep 18

U.S. 10-YEAR TREASURY AND TIPS YIELDS

10Y TIPS Yield

10Y Treasury Yield

Source: U.S. Department of Treasury

U.S. Fixed Income Markets

Page 5


Changes in bond spreads over 10-year German bunds were mixed across the eurozone. The European Central Bank (ECB) reiterated its expectations that any tightening to conventional monetary policy would only take place in the second half of 2019. We are, however, drawing nearer to the end of quantitative easing in the Eurozone which could ease downward pressure on bond yields that has prevailed for several years and potentially remove support for risk assets.

Italian bond yields rose by 49bps to 3.18%, as the country’s populist coalition agreed a budget with a fiscal deficit of 2.4%, significantly higher than finance minister Giovanni Tria’s preferred target of a 1.6% deficit. The spread between Italian 10-year government bonds and German bunds widened by 32bps. Spanish government bond yields rose by 19bps to 1.51% over the quarter.

Greek government bond yields rose by 20bps to 4.14% as the ECB confirmed it would stop providing liquidity to Greek banks, by accepting Greek government bonds as collateral, after Greece’s bail-out deal. Over the quarter, the S&P improved its credit rating for Greece to positive from stable.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18

EUROZONE PERIPHERAL BOND SPREADS(10-YEAR SPREADS OVER GERMAN BUNDS)

Spain Italy

Portugal Greece

Ireland

Source: Factset

European Fixed Income Markets

Page 6


Credit spreads whipsawed over the third quarter, as initial narrowing over July was offset by spreads blowing out in August, before contracting again in September. Overall, spreads were down over the three months supporting credit market outperformance over government bonds.

U.S. Corporate bond spreads and Long Government/Credit bond spreads narrowed by 17bps and 11bps, respectively. Of the longer maturity indexes, Long Credit narrowed the most at 21bps.

The strong relative performance of high yield bonds persisted; spreads on the Bloomberg Barclays US High Yield Index dropped by 47bps to 316bps, and primarily drove the 2.4% quarterly return. High yield also benefitted from lower interest rate sensitivity relative to the broader credit index.

Long Government bonds spreads widened by 1bp whilst MBS bonds spreads remained unchanged.

Spread (bps) 09/30/2018 06/30/2018 09/30/2017 Quarterly Change (bps) 1-Year Change (bps)

U.S. Aggregate 39 44 38 -5 1

Long Gov't 2 1 2 1 0

Long Credit 153 174 149 -21 4

Long Gov't/Credit 90 101 90 -11 0

MBS 28 28 22 0 6

CMBS 60 70 71 -10 -11

ABS 38 47 44 -9 -6

Corporate 106 123 101 -17 5

High Yield 316 363 347 -47 -31

Global Emerging Markets 273 288 235 -15 38

Source: FactSet

Credit Spreads

Page 7


The U.S. dollar continued on an upward trend albeit to a lesser extent compared to the previous two quarters as it rose 1.3% on a trade-weighted basis over the quarter. Tightening U.S. monetary policy and strong economic fundamentals led the U.S. dollar higher.

The U.S. dollar appreciated against all the major currencies. Brexit uncertainty in the UK, Italian budget uncertainty in the Eurozone and widening interest rate differentials with the Bank of Japan (BoJ) contributed to the strong U.S. dollar performance. During the quarter, the BoJ loosened its yield curve control policy; the yield on 10-year Japanese government bonds will now be able to fluctuate by 0.2% around zero, up from the previous range of 0.1%.

The Canadian dollar performed strongly against a wide range of currencies, most notably against the Japanese yen (an appreciation of 4.4% in Q3 2018). Uncertainty surrounding the future of the Canadian economy was allayed late in the quarter as concessions were made with the late save in the form of the USMCA agreement.

90

95

100

105

110

115

120

125

130


TRADE WEIGHTED U.S. DOLLAR INDEX(1997 = 100)

Source: Federal Reserve

60

80

100

120

140

160

180


U.S. DOLLAR RELATIVE TO EUR, GBP AND JPYREBASED TO 100 AT 09/28/2012

USDEUR

USDGBP

USDJPY

Source: Factset

Stronger Dollar

Weaker Dollar

Currency

Page 8


The Bloomberg Commodity Index returned -2.0% during a weak quarter for commodities.

Energy was the best performing sector over the quarter with a return of 4.4%. The uncertainty of the impact on U.S. sanctions against Iran and OPEC's response, helped send Brent crude oil prices higher. However, the glut of U.S. crude oil supplies dragged down the price of WTI crude oil to US$73.16/bbl – the price spread relative to Brent crude oil widened to just under US$10/bbl.

Other than Energy, the other notable increase was Livestock, which rose by 2.9% in Q3 2018.

Meanwhile, agriculture and industrial metal commodities, which are more impacted by global trade uncertainty, detracted from the overall index return. Industrial metals (-6.9%) were particularly affected with the price of copper dropping by 7.0% over the quarter to US$6,180/bbl.

The detrimental impact of a stronger U.S. dollar on commodities was noticeable in other markets with declines in Softs, Grains, and Precious Metals.

-2.0%

-5.3%

4.4%

-6.9%

-6.0%

-5.4%

-12.5%

-3.0%

2.9%

2.6%

-7.9%

28.1%

-2.4%

-8.8%

-12.7%

-18.8%

-10.7%

0.8%

-30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

Bloomberg Commodity Index

Ex-Energy

Energy

Industrial Metals

Prec. Metals

Agric.

Softs

Grains

Livestock

COMMODITY RETURNS AS OF 09/30/2018

Third Quarter 2018

One-Year

Source: BloombergNote: Softs and Grains are part of the wider Agriculture sector

Commodities

Page 9


Hedge fund performance was positive across all strategies (except for Emerging Markets) in the third quarter. Distressed-Restructuring and Relative Value were the best performers with a return of 1.4% and 1.3% respectively whilst Emerging Market hedge funds continued to be the worst performer with a return of -3.2%.

July performance was positive across most strategies with Relative Value and Equity Hedge leading the way. August performance was led by Macro hedge funds, snapping a 3-month decline. Driven by currency exposure, Macro sub-strategy performance was led by quantitative, trend-following CTA strategies. September strategy performance was led by Relative Value funds mainly due to Sovereign bond and Asset Backed exposures.

HFRI Fund-Weighted Composite Index and the HFRI Fund of Funds Composite Index produced returns of 0.6% and 0.3% respectively.

0.7%

0.0%

0.5%

-3.2%

0.8%

1.4%

1.3%

0.6%

0.3%

2.8%

0.5%

5.1%

-3.2%

4.8%

6.0%

4.1%

4.0%

3.1%

-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Fixed Income/Convertible Arb.

Global Macro

Equity Hedge

Emerging Markets

Event-Driven

Distressed-Restructuring

Relative Value

Fund-Weighted Composite Index

Fund of Funds Composite Index

HEDGE FUND PERFORMANCE AS OF 09/30/2018

Third Quarter

One-Year

Note: Latest 5 months of HFR data are estimated by HFR and may change in the future.Source: HFR

Hedge Fund Markets Overview

Page 10


CAP RATES BY SECTORSOURCE: RCA, AON HEWITT 6/30/2018

U.S. Core real estate returned 2.09%* over the third quarter, equating to 8.7% total gross return year-over-year, with 4.3% made up of income. Net incomegrowth is expected to be the larger driver of the total return going forward given the current point of the real estate cycle.

After posting positive gains early in the quarter, global property stocks (FTSE EPRA/NAREIT Developed Index) ended Q3 with a slight loss (-0.2%) and areup 4.6% for the trailing year. U.S. REITs led the way with a marginal gain of 0.8%, as both the Europe and Asia/Pacific regions fell during the quarter.Although positive for the quarter, the U.S. REIT market (FTSE NAREIT Equity REITs Index) suffered the biggest loss in September among the major assetclasses, down 2.5% compared with a 7.6% return for S&P 500. The Federal Reserve lifted short-term interest rates during the month which sparkedinvestor concerns over the future performance of REITs. This marked the first monthly setback for US securitized real estate since February. The 10-yearU.S. Treasury bond yield stood at 3.1% as of quarter end, compared to the U.S. REIT dividend yield of 4.2%. Transaction market volume and pricingremains healthy across property types.

According to RCA, through August 2018, the U.S. property market has experienced price growth of 7.7% year-over-year across major sectors. Further,transaction volume is up 46% over the same period, primarily driven by large portfolio deals and foreign capital sources.

Real Estate fundamentals remain healthy, but valuations across real estate and other asset classes are rich. Return expectations have normalized , withgo forward expectations in line with historical norms. Rising interest rates have led to asset value correction fears across various asset classes; within realestate, investors can mitigate these risks by shifting preference to investments that can participate and benefit from economic growth, with downsideprotection offered by current income. Aon prefers investments that offer relatively strong rental income growth, or value-add potential with near-termincome generation potential.

It is critical to identify sub-sector and sub-market driven themes in the current environment; Unlike the last 6-7 year period, as assets are no longer tradingat deep discounts to replacement value. Real estate investments should seek levers of NOI growth that are not predicated on continued market uplift. Forexample, an investment thesis can focus towards sectors benefiting from secular changes (e.g. Industrial and e-commerce), acquiring in-place rents belowcurrent market terms, and improving operational efficiency.

*Indicates preliminary NFI-ODCE data gross of fees

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Office Industrial Retail Apartment

2.1%

8.7% 8.8%

10.7%

5.6%

0.8%

3.3%

7.6%

9.2%

7.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Third Quarter2018

1-Year 3-Years 5-Years 10-Years

PRIVATE VS. PUBLIC REAL ESTATE RETURNSAS OF 09/30/2018

Private (NFI-ODCE Gross)*

Public (NAREIT Gross)

*Second quarter returns are preliminarySources: NCREIF, Factset

U.S. Commercial Real Estate Markets

Page 11

Fairfax County Public Schools – Summary

This report has been prepared by Aon Hewitt Investment Consulting (AHIC) to provide Fairfax County Public Schools with an

objective, third party review of the historical investment results of the 457(b) Plan.

Asset Allocation

The Fairfax County Public Schools 457(b) Plan currently offers 8 investment options and a series of lifecycle funds. As of

September 30, 2018, the Plan had 1 guaranteed interest fund, 1 fixed income fund, 1 inflation-sensitive solution, 2 passively-

managed domestic equity funds, 2 actively-managed domestic equity funds, 1 actively-managed foreign equity fund and a series

of actively managed target date funds. The two passively-managed domestic equity funds cover the following asset classes:

large cap core and mid cap core. The two actively-managed domestic equity funds cover the following asset classes: large cap

core and mid cap growth. Participants may allocate their investments among the funds in accordance with their own personal

tolerance for risk. As of September 30, 2018, the assets of the Plan totaled $231.5 million. The Plan held 14.0% of assets in the

guaranteed interest product, 7.6% in fixed income, 57.7% in domestic equity, 8.6% in foreign equity and 11.1% in target date

funds. The Plan’s asset allocation by fund is detailed later in this report.

Plan Performance

During the third quarter of 2018, global equity markets were impacted by developments in trade negotiations between the U.S.

and Canada paving the way for an agreement between the U.S., Canada, and Mexico. The trade war with China picked up steam

as relations continued to deteriorate, but despite this, global equities returned 3.9% for the quarter. Domestically, the Russell

3000 Index returned 7.1% during the third quarter and generated a 17.6% return over the trailing one-year period. All sectors

generated positive returns for the quarter, with the Healthcare (13.6%) and Producer Durables (9.3%) sectors leading the way.

Performance was positive across all market capitalization spectrums, and large cap stocks outperformed both small and medium

cap stocks. Value continued to lag growth significantly, which can be partly attributed to lower exposure to tech stocks which have

performed well over the last year. Large cap growth stocks generated the highest quarterly returns at 9.6%. Developed non-U.S.

equity markets lagged behind U.S. this quarter with the MSCI EAFE Index generating 1.4%. Emerging markets lagged developed

non-U.S. markets as well; the MSCI Emerging Markets Index returned -1.1% for the quarter. The domestic fixed income market,

as represented by Bloomberg Barclays US Aggregate Bond Index, posted a flat return of 0.0% for the quarter with corporate

bonds being the strongest absolute performer (+1.0%). Shorter duration bonds outperformed intermediate and longer duration

bonds over the quarter as the yield curve flattened with yields rising across all maturities and the spread between 10-year and 2-

year U.S. Treasuries narrowing to 24bps from 33bps.

Page 12


Plan Performance (continued)

Against this backdrop the plan’s options generated mostly positive returns while most of the actively managed target date funds

underperformed their benchmarks.

Longer-term relative performance of most of the Plan’s active investments also had mixed results for the ten-year period ending

September 30, 2018. Allowing for the expense ratios of the funds, both of the Plan’s index options successfully tracked their target

Indices during the quarter as well as for longer periods.

Quarterly Fund Attribution

PIMCO Total Return Fund outperformed during the quarter

+ Developed market interest rate strategies, particularly country selection in Europe

+ Positioning in non-agency MBS

+ Local rate exposure in Brazil

PIMCO Inflation Response Multi-Asset Fund outperformed during the quarter

+ U.S. and U.K. nominal sovereign strategies, including duration positioning

+ European nominal sovereign strategies

+ Active commodity and REIT strategies

Page 13


Quarterly Fund Attribution (continued)

Dodge & Cox Stock Fund underperformed during the quarter

- Underweight to the technology sector

- Overweight and stock selection within the financial sector

- Specific holdings Anadarko Petroleum, Schlumberger, and Bank of New York Mellon

Baron Growth Fund outperformed during the quarter

+ Stock selection within the financial, information technology, and healthcare sectors

+ Specific holdings Iridium Communications Inc., Gartner Inc., and Bio-Techne Corporation

Artisan International Fund outperformed during the quarter

+ Stock selection in the healthcare and technology sectors

+ Wirecard, Medtronic, and Airbus

Page 14

Financial Reconciliation

As of September 30, 2018 Fairfax County Public Schools

Market Value as

of 6/30/2018 Net

Transfers Contributions Distributions

Capital

Apprec./Deprec. Market Value as

of 9/30/2018

U.S. FIXED INCOME

Great West Portfolio Fund 32,429,930.16$ 760,374.90 574,579.20 1,549,536.40 157,136.47 32,372,484.37$

PIMCO Total Return Adm 18,978,854.42$ -282,000.14 166,507.10 1,528,440.79 7,397.99 17,342,318.58$

PIMCO Inflation Response MultiAsst Inst 293,437.85$ 2,687.34 5,008.59 19,323.78 -2,609.64 279,200.36$

TARGET DATE

T. Rowe Price Retirement I 2005 I 573,529.70$ -6,749.02 18,035.32 1,092.13 10,019.96 593,743.83$

T. Rowe Price Retirement I 2010 I 193,183.04$ 16,119.59 322.30 135,011.10 2,696.76 77,310.59$

T. Rowe Price Retirement I 2015 I 1,707,645.82$ 5,998.69 11,060.20 555.39 34,349.55 1,758,498.87$

T. Rowe Price Retirement I 2020 I 6,190,924.20$ 317,523.80 56,643.08 218,550.20 140,982.16 6,487,523.04$

T. Rowe Price Retirement I 2025 I 4,244,090.65$ -76,236.78 123,197.24 96,581.17 102,265.39 4,296,735.33$




T. Rowe Price Retirement I 2045 I 1,132,629.73$ 6,005.65 62,121.13 - 30,947.87 1,231,704.38$

T. Rowe Price Retirement I 2050 I 686,434.19$ 8,326.83 22,020.91 - 1,881.68 735,663.61$

T. Rowe Price Retirement I 2055 I 1,097,579.34$ -2,946.37 60,397.43 18,230.25 2,983.70 1,166,783.85$

U.S. EQUITY

iShares S&P 500 Index 33,560,104.12$ 102,696.32 563,729.43 650,629.26 2,577,980.70 36,153,881.38$

Dodge & Cox Stock 28,522,620.31$ -609,634.73 238,782.80 980,033.95 1,805,715.20 28,977,449.72$

Vanguard Mid Cap Index 34,972,040.99$ -134,791.03 399,945.74 840,797.59 1,626,591.60 36,022,989.75$

Baron Growth Inst 30,692,267.06$ -326,868.90 260,267.37 550,448.38 2,428,415.83 32,503,632.98$

INTERNATIONAL EQUITY

Artisan International Inv 19,644,082.26$ -220,056.04 221,646.45 388,454.96 553,586.02 19,810,803.73$

OTHER

Loan Fund 1,466,116.98$ - - - - 1,687,041.50$

Forfeiture Account 516,912.55$ - - - - 570,841.68$

Total 457(b) Plan 225,534,648.06 3,174,336.54 7,228,133.40 9,704,255.58 231,503,960.63

Page 15

June 30, 2018 : $225,534,648 September 30, 2018 : $231,503,961

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 127,747,032.48 56.64¢£

International Equity 19,644,082.26 8.71¢£

Domestic Fixed Income 18,978,854.42 8.42¢£

GIC 32,429,930.16 14.38¢£

Real Return 293,437.85 0.13¢£

Loan Fund 1,466,116.98 0.65¢£

Cash 516,912.55 0.23¢£

Life Cycle 24,458,281.36 10.84¢£

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 133,657,953.83 57.73¢£

International Equity 19,810,803.73 8.56¢£

Domestic Fixed Income 17,342,318.58 7.49¢£

GIC 32,372,484.37 13.98¢£

Real Return 279,200.36 0.12¢£

Loan Fund 1,687,041.50 0.73¢£

Cash 570,841.68 0.25¢£

Life Cycle 25,783,316.58 11.14¢£

Fairfax County Public Schools

457(b) Plan

Asset Allocation by Segment

Page 16

Domestic Equity International Equity Domestic Fixed Income GIC

Real Return Loan Fund Cash Life Cycle

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Allo

ca

tio

n (%

)

3/10 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 3/15 9/15 3/16 9/16 3/17 9/17 3/18 9/18


Historical Asset Allocation by Segment

April 1, 2010 To September 30, 2018

Total 457(b) Plan

Page 17

Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

Total 457(b) Plan 231,503.96 100.00

U.S. Fixed Income 49,994.00 21.60

Great West Portfolio Fund 32,372.48 13.98 0.48 1.46 1.95 1.96 1.93 1.93 2.23

50% B Bar Int. Agg/50% 90 day T-Bill 0.30 0.22 0.33 0.88 1.10 1.05 1.82

90 Day U.S. Treasury Bill 0.49 1.30 1.59 0.80 0.50 0.37 0.32

PIMCO Total Return Adm 17,342.32 7.49 0.03 (70) -1.80 (77) -1.75 (92) 1.90 (28) 2.01 (69) 2.84 (20) 4.81 (18)

Blmbg. Barc. U.S. Aggregate 0.02 (71) -1.60 (51) -1.22 (50) 1.31 (61) 2.16 (56) 2.02 (70) 3.77 (73)

PIMCO Inflation Response MultiAsst Inst 279.20 0.12 -0.84 (98) -1.02 (83) 1.91 (70) 5.51 (74) 1.95 (88) 1.94 (96) -

PIMCO IRMA Benchmark -1.35 (98) -2.06 (91) 0.10 (87) 2.42 (95) -0.18 (97) 0.10 (100) 1.72 (100)

Target Date 25,783.32 11.14

T. Rowe Price Retirement I 2005 I 593.74 0.26 1.75 (32) 1.48 (28) 3.64 (28) 6.83 (15) - - -

T. Rowe Price Retirement 2005* 1.69 (35) 1.39 (29) 3.59 (29) 6.81 (16) 5.23 (20) 7.02 (18) 6.55 (26)

T. Rowe Price Retirement 2005 Index 1.93 (27) 1.81 (18) 4.26 (19) 6.51 (24) 5.28 (20) 6.75 (22) 6.00 (39)




T. Rowe Price Retirement I 2015 I 1,758.50 0.76 2.01 (26) 2.18 (17) 4.91 (24) 8.50 (1) - - -







Asset Allocation & Performance

As of September 30, 2018

*Alternate share class shown to illustrate performance history.

Page 18




Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years























Page 19




Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

U.S. Equity 133,657.95 57.73

iShares S&P 500 Index 36,153.88 15.62 7.69 (25) 10.53 (25) 17.87 (13) 17.26 (19) 13.89 (13) 16.82 (17) 11.90 (11)

S&P 500 Index 7.71 (10) 10.56 (4) 17.91 (3) 17.31 (6) 13.95 (1) 16.91 (1) 11.97 (2)

Dodge & Cox Stock 28,977.45 12.52 6.49 (73) 7.51 (74) 13.70 (76) 17.28 (17) 12.71 (48) 17.55 (10) 11.82 (31)

S&P 500 Index 7.71 (37) 10.56 (29) 17.91 (30) 17.31 (17) 13.95 (18) 16.91 (23) 11.97 (23)

Vanguard Mid Cap Index 36,022.99 15.56 4.68 (48) 7.36 (52) 13.45 (56) 13.79 (62) 11.68 (33) 15.92 (41) 12.44 (26)

Vanguard Spliced Mid Cap Index 4.65 (49) 7.37 (52) 13.44 (56) 13.81 (61) 11.71 (32) 15.95 (39) 12.46 (26)

Baron Growth Inst 32,503.63 14.04 7.94 (35) 19.47 (19) 25.86 (22) 17.93 (29) 11.90 (54) 16.74 (45) -

Baron Growth Rtl* 7.86 (36) 19.23 (19) 25.55 (23) 17.62 (32) 11.62 (63) 16.44 (54) 12.40 (47)

Russell Midcap Growth Index 7.57 (40) 13.38 (57) 21.10 (50) 16.65 (43) 13.00 (36) 16.86 (41) 13.46 (18)

International Equity 19,810.80 8.56

Artisan International Inv 19,810.80 8.56 2.86 (5) 0.48 (16) 4.45 (15) 8.30 (57) 3.99 (45) 9.99 (7) 6.64 (13)

MSCI EAFE Index (Net) 1.35 (34) -1.43 (28) 2.74 (21) 9.23 (36) 4.42 (33) 8.30 (45) 5.38 (40)

MSCI AC World ex USA Index (Net) 0.71 (51) -3.09 (60) 1.76 (40) 9.97 (20) 4.12 (39) 7.25 (79) 5.18 (46)


Page 20

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

U.S. Fixed Income

Great West Portfolio Fund 1.95 1.98 2.00 1.86 1.53 2.11 2.55 2.67 3.37 3.42

50% B Bar Int. Agg/50% 90 day T-Bill 1.56 1.12 0.62 2.06 -0.48 1.80 2.99 3.11 3.28 3.50

90 Day U.S. Treasury Bill 0.86 0.25 0.03 0.04 0.05 0.08 0.08 0.13 0.17 2.10

PIMCO Total Return Adm 4.87 (7) 2.34 (81) 0.47 (40) 4.43 (81) -2.16 (72) 10.10 (3) 3.91 (95) 8.57 (17) 13.53 (31) 4.56 (23)

Blmbg. Barc. U.S. Aggregate 3.54 (62) 2.65 (64) 0.55 (30) 5.97 (32) -2.02 (64) 4.21 (77) 7.84 (15) 6.54 (69) 5.93 (84) 5.24 (19)

IM U.S. Broad Market Core Fixed Income (MF) Median 3.78 2.95 0.35 5.76 -1.64 6.06 6.98 7.24 10.79 0.44

PIMCO Inflation Response MultiAsst Inst 8.59 (75) 10.53 (20) -6.77 (78) 1.57 (74) -9.29 (100) 9.56 (64) - - - -

PIMCO IRMA Benchmark 5.08 (91) 6.76 (48) -7.47 (82) -0.34 (82) -8.89 (100) 6.58 (84) 4.56 (11) 12.98 (45) 17.17 (90) -12.37 (12)

IM Flexible Portfolio (MF) Median 12.76 6.58 -3.23 3.83 12.10 11.02 -1.69 12.37 25.23 -28.84

Target Date

T. Rowe Price Retirement I 2005 I 10.74 (19) 6.69 (30) - - - - - - - -

T. Rowe Price Retirement 2005* 10.67 (20) 6.72 (30) -0.75 (39) 4.72 (40) 9.74 (24) 11.35 (16) 1.43 (66) 11.51 (18) 24.55 (18) -22.24 (80)

T. Rowe Price Retirement 2005 Index 10.12 (26) 5.84 (45) -0.10 (20) 5.48 (25) 9.86 (23) 9.52 (41) 2.38 (44) 10.22 (42) 16.91 (64) -19.10 (67)

IM Mixed-Asset Target Alloc Consv (MF) Median 8.83 5.58 -1.13 4.21 7.55 9.04 2.10 9.94 18.98 -17.49


T. Rowe Price Retirement 2010* 11.66 (13) 7.11 (11) -0.76 (63) 4.99 (23) 11.93 (8) 12.44 (6) 0.54 (55) 12.70 (4) 27.95 (4) -26.71 (80)


IM Mixed-Asset Target 2010 (MF) Median 10.39 6.22 -0.63 4.49 9.24 9.64 0.90 10.88 22.97 -24.07


T. Rowe Price Retirement 2015* 13.34 (12) 7.31 (14) -0.58 (36) 5.37 (32) 15.18 (2) 13.81 (1) -0.32 (81) 13.79 (4) 31.35 (1) -30.22 (86)









T. Rowe Price Retirement 2025 Index 16.68 (11) 8.21 (9) -0.56 (34) 7.06 (9) 20.01 (4) 14.00 (22) -0.22 (25) 14.12 (26) 26.15 (66) -32.24 (36)

IM Mixed-Asset Target 2025 (MF) Median 15.23 7.19 -0.95 5.52 16.08 13.27 -1.05 13.67 27.71 -33.66






T. Rowe Price Retirement 2035* 20.88 (9) 7.64 (66) 0.13 (4) 6.07 (38) 24.86 (3) 17.35 (1) -3.26 (61) 16.34 (1) 39.04 (1) -38.88 (71)




Calendar Year Performance


Returns for periods greater than one year are annualized.Returns are expressed as percentages.*Alternate share class shown to illustrate performance history.

Page 21


Calendar Year Performance


2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

















U.S. Equity

iShares S&P 500 Index 21.77 (19) 11.92 (19) 1.35 (19) 13.61 (14) 32.21 (28) 15.84 (33) 1.98 (41) 14.92 (36) 26.49 (18) -37.01 (30)

S&P 500 Index 21.83 (3) 11.96 (8) 1.38 (7) 13.69 (1) 32.39 (3) 16.00 (3) 2.11 (8) 15.06 (1) 26.46 (23) -37.00 (29)

IM S&P 500 Index (MF) Median 21.64 11.79 1.23 13.47 32.11 15.77 1.96 14.82 26.39 -37.06

Dodge & Cox Stock 18.33 (80) 21.28 (1) -4.49 (94) 10.40 (72) 40.55 (1) 22.01 (2) -4.08 (90) 13.49 (55) 31.27 (26) -43.31 (91)

S&P 500 Index 21.83 (38) 11.96 (29) 1.38 (36) 13.69 (21) 32.39 (45) 16.00 (42) 2.11 (27) 15.06 (34) 26.46 (57) -37.00 (54)

IM U.S. Large Cap Core Equity (MF) Median 21.05 10.34 0.58 11.86 32.16 15.42 0.65 13.90 27.68 -36.60

Vanguard Mid Cap Index 19.29 (46) 11.23 (58) -1.33 (40) 13.78 (9) 35.17 (49) 16.01 (47) -1.96 (43) 25.67 (35) 40.51 (32) -41.76 (71)

Vanguard Spliced Mid Cap Index 19.30 (46) 11.25 (58) -1.28 (40) 13.83 (9) 35.21 (48) 16.04 (46) -1.91 (41) 25.69 (34) 40.49 (32) -41.80 (71)

IM U.S. Mid Cap Equity (MF) Median 18.38 12.41 -2.32 8.22 34.66 15.55 -2.93 23.93 36.35 -39.43

Baron Growth Inst 27.35 (28) 6.31 (48) -4.06 (83) 4.66 (76) 38.69 (23) 16.74 (24) 1.51 (13) 24.32 (56) - -

Baron Growth Rtl* 27.04 (29) 6.04 (52) -4.31 (85) 4.40 (77) 38.32 (25) 16.43 (29) 1.24 (15) 24.01 (59) 34.24 (64) -39.18 (25)

Russell Midcap Growth Index 25.27 (43) 7.33 (38) -0.20 (51) 11.90 (11) 35.74 (46) 15.81 (36) -1.65 (35) 26.38 (41) 46.29 (22) -44.32 (68)

IM U.S. Mid Cap Growth Equity (MF) Median 24.73 6.18 0.00 7.37 35.30 14.71 -2.93 25.39 39.69 -41.62

International Equity

Artisan International Inv 31.02 (13) -9.66 (100) -3.85 (80) -0.97 (10) 25.18 (9) 25.39 (4) -7.26 (19) 5.91 (67) 39.77 (10) -46.96 (98)

MSCI EAFE Index (Net) 25.03 (54) 1.00 (51) -0.81 (46) -4.90 (44) 22.78 (16) 17.32 (68) -12.14 (51) 7.75 (52) 31.78 (51) -43.38 (66)

MSCI AC World ex USA Index (Net) 27.19 (36) 4.50 (17) -5.66 (86) -3.87 (27) 15.29 (82) 16.83 (71) -13.71 (75) 11.15 (24) 41.45 (5) -45.53 (88)

IM International Large Cap Equity (MF) Median 25.59 1.01 -1.33 -5.02 20.27 19.25 -11.99 7.88 31.91 -41.84

Returns for periods greater than one year are annualized.Returns are expressed as percentages.*Alternate share class shown to illustrate performance history.

Page 22

Great West Portfolio Fund PIMCO Total Return Adm PIMCO Inflation Response MultiAsst Inst

T. Rowe Price Ret 2005* T. Rowe Price Ret 2010* T. Rowe Price Ret 2015*



T. Rowe Price Ret 2055* iShares S&P 500 Index Dodge & Cox Stock

Vanguard Mid Cap Index Baron Growth Inst Artisan International Inv

-6.0

-3.0

0.0

3.0

6.0

9.0

12.0

15.0

18.0

21.0

24.0

An

nu

aliz

ed

Re

turn

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0Annualized Standard Deviation


Risk Profile

3 Years Ending September 30, 2018


Page 23

Fairfax County Public Schools – Watch List Review

Process

U.S FIXED INCOME

Great West Portfolio Fund No No No No No N/RGreen Green Green Green

PIMCO Total Return Adm No No No Yes No BuyGreen Green Green Green

PIMCO Inflation Response MultiAsst Inst No No No No No BuyGreen Green Green Green

TARGET DATE

T. Rowe Price Retirement Series No No No No No BuyGreen Green Green Green

U.S. EQUITY

iShares S&P 500 Index No No No No No BuyGreen Green Green Green

Dodge & Cox Stock Fund No No No Yes Yes BuyYellow Yellow Green Green

Vanguard Mid Cap Index No No No No No BuyGreen Green Green Green

Baron Growth Instl No No No Yes No QualifiedGreen Green Green Green

INTERNATIONAL EQUITY

Artisan International Inv No No No Yes No BuyGreen Green Green Green

Status

Green

Yellow

Red

Changes in Watch List designations from the previous quarter are highlighted in bold.

Passively managed index funds are expected to track their benchmark within a reasonable margin.

Significant

Organizational

Change

Adverse Change

in Portfolio

Manager

Active – On “closely monitored list”

Active – No action required

4th

Quarter

2017

Diverged from

Strategy and/or

Portfolio

Characteristics

Underperformed /

Adverse Tracking

During Trailing 5-

Years

4 or more affirmatives or “Yellow” for 4 consecutive quarters

1 or less affirmatives

Full fund review and recommendation for action will be made

Organization/Staff

2 to 3 affirmatives

Underperformed /

Adverse Tracking in

3 of 4 Trailing

Calendar Quarters

Suggested ActionNumber of Criteria Met

1st

Quarter

2018

3rd

Quarter

2018

Watch List StatusPerformance

2nd

Quarter

2018

Overall

Manager

Research

Rating

Page 24

Watch List Guidelines

AHIC Investment Option Review Criteria

1. If the Fund has underperformed its benchmark over the most recent trailing five-year period

– If passively managed, the fund’s return must be no more than 0.5 percentage points above or below the

return of the benchmark

2. If the fund has underperformed its benchmark in three of the most recent four calendar quarters

3. If the Fund diverged from its strategy and / or portfolio characteristics

4. Adverse change in portfolio manager

5. Merger with another fund

6. Significant organizational change

Suggested Action Triggers

1. When an investment fund is placed on the Red Watch List, a formal fund retention meeting may be

conducted. At this meeting, the fund’s representative would be asked to address all relevant issues and

explain why the fund should be retained. After this retention meeting, the Investment Committee may elect to

either terminate the fund or grant it a one-year extension.

2. If a fund is granted the one-year extension described above and remains on the Watch List for this period, the

fund may be terminated unless the Committee determines that an alternate course of action is appropriate.

Special Circumstances

1. In the event of a major change to the fund (e.g., investments, ownership, and staffing), the Committee retains

the right to immediately terminate any fund without invoking the Watch List criteria in any fashion.

Page 25

Fairfax County Public Schools 457(b) Plan As of September 30, 2018

Investment Option Participants Investment Options Participants

Great West Portfolio 934 One 621

PIMCO Total Return 1,006 Two 366

PIMCO Inflation Response MultiAsst 49 Three 264

T. Rowe Price Retirement I 2005 I 35 Four 291

T. Rowe Price Retirement I 2010 I 18 Five 267

T. Rowe Price Retirement I 2015 I 39 Six 240

T. Rowe Price Retirement I 2020 I 90 Seven 157

T. Rowe Price Retirement I 2025 I 116 Eight 22

T. Rowe Price Retirement I 2030 I 98 More than Eight 37

T. Rowe Price Retirement I 2035 I 129



T. Rowe Price Retirement I 2050 I 52 Item Result

T. Rowe Price Retirement I 2055 I 75 Participation Rate 53.25%

iShares S&P 500 Index 944 Number of Participants with Account Balances 2,265

Dodge & Cox Stock 921 Average Deferral Rate 16.95%

Vanguard Mid Cap Index 1,124 Average Number of Funds per Participant 3.45

Baron Growth 1,006 Average Account Balance $79,296.46

Artisan International 994

Investment Option Participants

Great-West Portfolio Fund 71

PIMCO Total Return Admin 87

PIMCO Inflation Response MultiAsst 4


T. Rowe Price Retirement I 2010 I -










iShares S&P 500 Index 71

Dodge & Cox Stock 70

Vanguard Mid Cap Index Ins 90

Baron Growth Instl 86

Artisan International Inv 87

* Information directly provided by Empower Retirement.

Demographic Information

Participants per Investment Option

Participants with Balance in One Investment Option

Investment Options per Participant

Other Demographics

Page 26

457(b) Plan Statistics

457(b) 403(b)Contributions Sept 2016 $ 1,363,000 $ 3.5 millionContributions Sept 2017 $ 1,525,000 $ 3.8 millionContributions Sept 2018 $ 1,170,000 $ 3.6 millionContributions Oct 2018 $ 1,115,000 $ 3.5 million

Assets Sept 30, 2016 $177.2 millionAssets Sept 30, 2017 $207.8 millionAssets Sept 30, 2018 $229.8 millionAssets Oct 31, 2018 $216.0 million

Number of Participants Sept 2016 2273 13029 Number of Participants Sept 2017 2249 13067Number of Participants Sept 2018 2273 13154

Average Contribution/Month – Sept 2016 $1043/mo; $146/biweeklyAverage Contribution/Month – Sept 2017 $1075/mo; $170/biweeklyAverage Contribution/Month – Sept 2018 $ 995/mo; $242/biweekly

403(b)Average Contribution/Month – Sept 2018 $732/mo; $166 biweekly

Number of Employees Currently Contributing to 457(b): 1240/mo; 55/biweeklyNumber of Employees Currently Contributing to 403(b): 5135/mo; 623/biweekly

Number of Employees Currently Contributing to both 457 & 403(b): 409 total

Page 27

457 Plan Participants

Age Monthly Bi-Weekly

<21 0 0

21-25 13 0

26-30 55 0

31-35 104 1

36-40 134 6

41-45 135 3

46-50 198 15

51-55 212 12

56-60 202 8

61-65 138 8

66-70 39 1

71-75 8 1

76-80 2 0

Total 1240 55

0

50

100

150

200

250

<21 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80

Enro

llme

nt

Age Range

457 Monthly Plan Participants

0

2

4

6

8

10

12

14

16

<21 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80

Enro

llme

nt

Age Range

457 Bi-Weekly Plan Participants

Page 28

403(b) Plan Participants

Age Monthly Bi-Weekly

<21 0 1

21-25 54 0

26-30 315 10

31-35 551 20

36-40 680 40

41-45 674 67

46-50 898 79

51-55 731 119

56-60 642 133

61-65 442 94

66-70 116 34

71-75 23 12

76-80 9 13

81-85 0 0

86-90 0 1

Total 5135 623

0

100

200

300

400

500

600

700

800

900

1000

<21 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85En

rollm

en

t

Age Range

403(b) Monthly Plan Participants

0

20

40

60

80

100

120

140

<21 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90

Enro

llme

nt

Age Range

403(b) Bi-Weekly Plan Participants

Page 29

Fairfax County Public Schools 457(b) Plan

Contribution Analysis

Stable Value 18%

Fixed Income 5% Real Return

0%

Large Cap Blend (Passive)

18% Large Cap Blend

(Active) 7% Mid Cap Blend (Passive)

13%

Small Cap Growth 8%

International 7%

Lifecycle 24%

3rd Quarter 2018 Contribution Allocation

Stable Value 11% Fixed Income

5% Real Return

1%

Large Cap Blend (Passive)

19%

Large Cap Blend (Active)

7% Mid Cap Blend (Passive)

12%

Small Cap Growth 8%

International 6%

Lifecycle 31%

2nd Quarter 2018 Contribution Allocation

Page 30

Relative Ranking (3 Years Rolling) Relative Performance (10/01/08 to 09/30/18)

Relative Ranking vs. Peers (3 Years Rolling)

Style Map (Since Inception - 36 Months Rolling) Style History (Since Inception - 36 Months Rolling)

PIMCO Total Return Adm Blmbg. Barc. U.S. Aggregate

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/17 9/18 Cumulative Annualized Over/Under Relative Performance

Over/Under Performance

0.0

5.0

10.0

15.0

-5.0

-10.0

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18

Number ofObservations

>=Median Top Quartile Bottom Quartile >PIMCO Total Return Adm >Blmbg. Barc. U.S. Aggregate

PIMCO Total Return Adm 20 11 3 6 N/A 12

Blmbg. Barc. U.S. Aggregate 20 9 1 0 8 N/A

Style History Sep-2018 Average Style Exposure

Cap

ital

izat

ion

Manager Style

Barclays Capital Government Index

Barclays Capital U.S. Long Gov/CreditBarclays Capital 1-3yr Gov/Credit

Barclays Capital U.S. Credit Index

Barclays U.S. Credit Index Barclays 1-3yr Gov/Credit

Barclays Government Index Barclays U.S. Long Gov/Credit

0.0

25.0

50.0

75.0

100.0

11/97 8/99 5/01 2/03 11/04 8/06 5/08 2/10 11/11 8/13 5/15 2/17 9/18

PIMCO Total Return Adm 09/30/18

Page 31

Relative Ranking (3 Years Rolling)

Relative Performance (09/01/11 to 09/30/18)


PIMCO Inflation Response MultiAsst Inst PIMCO IRMA Benchmark

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18


>=Median Top Quartile Bottom Quartile >PIMCO Inflation Response MultiAsst Inst >PIMCO IRMA Benchmark

PIMCO Inflation Response MultiAsst Inst 17 0 0 12 N/A 17

PIMCO IRMA Benchmark 17 0 0 17 0 N/A

Cumulative Annualized Over/Under Relative Performance Over/Under Performance

0.0

3.0

6.0

-3.0

-6.0

Re

turn

(%)

9/11 3/12 9/12 3/13 9/13 3/14 9/14 3/15 9/15 3/16 9/16 3/17 9/17 3/18 9/18

PIMCO Inflation Response MultiAsst Inst 09/30/18

Page 32

Target Allocation: T. Rowe Price Retirement Funds

0%

20%

40%

60%

80%

100%

TargetBalanced

Target2005

Target2010

Target2015

Target2020

Target2025

Target2030

Target2035

Target2040

Target2045

Target2050

Target2055

Target2060

Fixed Income U.S. Equity Non-U.S. Equity Real Assets

Page 33

Target Allocation: T. Rowe Price Retirement Funds

Balanced 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

Fixed Income 62.75% 65.75% 60.75% 53.75% 43.75% 35.25% 27.75% 20.75% 15.75% 12.75% 12.75% 12.75% 12.75%

T. Rowe Price Dynamic Global Bond Fund - I Class 3.20% 4.65% 4.36% 4.00% 3.50% 3.00% 2.50% 1.97% 1.47% 1.17% 1.17% 1.17% 1.17%

T. Rowe Price Emerging Markets Bond Fund - I Class 3.62% 5.32% 4.85% 4.32% 3.58% 2.87% 2.22% 1.56% 0.95% 0.65% 0.65% 0.65% 0.65%

T. Rowe Price Floating Rate Fund - I Class 1.25% 1.83% 1.68% 1.52% 1.29% 1.07% 0.86% 0.64% 0.43% 0.32% 0.32% 0.32% 0.32%

T. Rowe Price High Yield Fund - I Class 1.81% 2.68% 2.41% 2.09% 1.68% 1.28% 0.93% 0.58% 0.25% 0.12% 0.12% 0.12% 0.12%

T. Rowe Price International Bond Fund - I Class 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

T. Rowe Price International Bond Fund (USD Hedged) - I Class 4.40% 6.40% 5.99% 5.50% 4.81% 4.13% 3.45% 2.72% 2.03% 1.62% 1.62% 1.62% 1.62%

T. Rowe Price Limited Duration Inflation Focused Bond Fund - I Class 29.75% 18.25% 16.25% 12.75% 7.75% 4.25% 1.75% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

T. Rowe Price New Income Fund - I Class 14.88% 21.63% 20.21% 18.61% 16.27% 13.94% 11.61% 9.17% 6.86% 5.46% 5.46% 5.46% 5.46%

T. Rowe Price U.S. Treasury Long-Term Fund- I Class 2.84% 3.99% 4.00% 3.96% 3.87% 3.71% 3.43% 3.11% 2.76% 2.41% 2.41% 2.41% 2.41%

T. Rowe Price U.S. Treasury Money Fund- I Class 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

U.S. Equity 24.67% 22.68% 25.99% 30.64% 37.24% 42.88% 47.84% 52.48% 55.80% 57.78% 57.78% 57.78% 57.78%

T. Rowe Price Equity Index 500 Fund - I Class 18.31% 16.83% 19.30% 17.05% 16.52% 13.94% 11.60% 9.30% 7.33% 6.42% 6.42% 6.42% 6.42%

T. Rowe Price Growth Stock Fund - I Class 0.00% 0.00% 0.00% 2.82% 5.51% 8.86% 11.84% 14.68% 16.88% 18.05% 18.05% 18.05% 18.05%

T. Rowe Price Mid-Cap Growth Fund - I Class 1.68% 1.54% 1.77% 2.09% 2.53% 2.91% 3.25% 3.57% 3.79% 3.93% 3.93% 3.93% 3.93%

T. Rowe Price Mid-Cap Value Fund - I Class 1.59% 1.47% 1.68% 1.99% 2.41% 2.77% 3.09% 3.39% 3.61% 3.73% 3.73% 3.73% 3.73%

T. Rowe Price New Horizons Fund - I Class 1.07% 0.98% 1.11% 1.32% 1.61% 1.85% 2.07% 2.27% 2.41% 2.50% 2.50% 2.50% 2.50%

T. Rowe Price Small-Cap Stock Fund - I Class 1.03% 0.95% 1.10% 1.28% 1.54% 1.79% 1.99% 2.18% 2.31% 2.41% 2.41% 2.41% 2.41%

T. Rowe Price Small-Cap Value Fund - I Class 0.99% 0.91% 1.03% 1.22% 1.50% 1.72% 1.92% 2.11% 2.24% 2.32% 2.32% 2.32% 2.32%

T. Rowe Price Value Fund - I Class 0.00% 0.00% 0.00% 2.87% 5.62% 9.04% 12.08% 14.98% 17.23% 18.42% 18.42% 18.42% 18.42%

Non-U.S. Equity 11.74% 10.79% 12.38% 14.57% 17.74% 20.42% 22.78% 24.98% 26.55% 27.51% 27.51% 27.51% 27.51%

T. Rowe Price Emerging Markets Stock Fund - I Class 1.70% 1.57% 1.80% 2.11% 2.57% 2.96% 3.31% 3.62% 3.85% 3.99% 3.99% 3.99% 3.99%

T. Rowe Price International Stock Fund - I Class 3.15% 2.89% 3.32% 3.90% 4.75% 5.47% 6.09% 6.69% 7.11% 7.37% 7.37% 7.37% 7.37%

T. Rowe Price International Value Equity Fund - I Class 3.38% 3.11% 3.56% 4.20% 5.11% 5.88% 6.55% 7.19% 7.63% 7.92% 7.92% 7.92% 7.92%

T. Rowe Price Overseas Stock Fund - I Class 3.51% 3.22% 3.70% 4.36% 5.31% 6.11% 6.83% 7.48% 7.96% 8.23% 8.23% 8.23% 8.23%

Real Assets 0.84% 0.78% 0.88% 1.04% 1.27% 1.45% 1.63% 1.79% 1.90% 1.96% 1.96% 1.96% 1.96%

T. Rowe Price Real Assets Fund - I Class 0.84% 0.78% 0.88% 1.04% 1.27% 1.45% 1.63% 1.79% 1.90% 1.96% 1.96% 1.96% 1.96%

Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Page 34




TRP Retirement 2005 TRP Retirement 2005 Index

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18


>=Median Top Quartile Bottom Quartile >TRP Retirement 2005 >TRP Retirement 2005 Index

TRP Retirement 2005 20 20 14 0 N/A 12

TRP Retirement 2005 Index 20 20 15 0 8 N/A


0.0

3.0

6.0

-3.0

-6.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18

TRP Retirement 2005 09/30/18

Alternate share class shown to illustrate performance history.

Page 35





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

3.0

6.0

-3.0

-6.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 36





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 37





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 38





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 39





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 40





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 41





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 42





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 43





0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18






0.0

4.0

8.0

-4.0

-8.0

Re

turn

(%)

10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 4/18 9/18



Page 44




iShares S&P 500 Index S&P 500 Index

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k



0.0

0.2

0.4

-0.2

-0.4

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18


>=Median Top Quartile Bottom Quartile >iShares S&P 500 Index >S&P 500 Index

iShares S&P 500 Index 20 20 18 0 N/A 0

S&P 500 Index 20 20 20 0 20 N/A


Cap

ital

izat

ion

Manager Style

Large Cap Growth

Small Cap GrowthSmall Cap Value

Large Cap Value

Russell 1000 Growth Index Russell 1000 Value Index


0.0

25.0

50.0

75.0

100.0

9/96 6/98 3/00 12/01 9/03 6/05 3/07 12/08 9/10 6/12 3/14 12/15 9/18

iShares S&P 500 Index 09/30/18

Page 45




Dodge & Cox Stock S&P 500 Index

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k



0.0

6.0

12.0

-6.0

-12.0

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18


>=Median Top Quartile Bottom Quartile >Dodge & Cox Stock >S&P 500 Index

Dodge & Cox Stock 20 14 11 1 N/A 9

S&P 500 Index 20 20 12 0 11 N/A


Cap

ital

izat

ion

Manager Style

Large Cap Growth


Large Cap Value



0.0

25.0

50.0

75.0

100.0

2/82 2/85 2/88 2/91 2/94 2/97 2/00 2/03 2/06 2/09 2/12 2/15 9/18

Dodge & Cox Stock 09/30/18

Page 46




Vanguard Mid Cap Index Vanguard Spliced Mid Cap Index

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k



0.0

0.1

0.2

-0.1

-0.2

-0.3

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18


>=Median Top Quartile Bottom Quartile >Vanguard Mid Cap Index >Vanguard Spliced Mid Cap Index

Vanguard Mid Cap Index 20 16 8 0 N/A 0

Vanguard Spliced Mid Cap Index 20 16 8 0 20 N/A


Cap

ital

izat

ion

Manager Style

Large Cap Growth


Large Cap Value



0.0

25.0

50.0

75.0

100.0

7/01 1/03 7/04 1/06 7/07 1/09 7/10 1/12 7/13 1/15 7/16 9/18

Vanguard Mid Cap Index 09/30/18

Page 47




Baron Growth Rtl Russell Midcap Growth Index

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k



0.0

5.0

10.0

-5.0

-10.0

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18


>=Median Top Quartile Bottom Quartile >Baron Growth Rtl >Russell Midcap Growth Index

Baron Growth Rtl 20 8 3 3 N/A 4

Russell Midcap Growth Index 20 20 6 0 16 N/A


Cap

ital

izat

ion

Manager Style

Large Cap Growth


Large Cap Value



0.0

25.0

50.0

75.0

100.0

3/98 12/99 9/01 6/03 3/05 12/06 9/08 6/10 3/12 12/13 9/15 6/17 9/18

Baron Growth Rtl 09/30/18


Page 48




Artisan International Inv

MSCI EAFE Index (Net)

MSCI AC World ex USA Index (Net)

0.0

25.0

50.0

75.0

100.0

Re

turn

Pe

rce

nti

le R

an

k

12/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/17 9/18

Cumulative Annualized Over/Under Relative Performance


0.0

5.0

10.0

-5.0

-10.0

Re

turn

(%)

10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/15 10/16 10/17 9/18


>=Median Top Quartile Bottom Quartile >Artisan International Inv >MSCI EAFE Index (Net) >MSCI AC World ex USA Index (Net)

Artisan International Inv 20 11 8 7 N/A 11 12

MSCI EAFE Index (Net) 20 16 1 0 9 N/A 15

MSCI AC World ex USA Index (Net) 20 5 1 10 8 5 N/A


Cap

ital

izat

ion

Manager Style

MSCI EAFE Growth Index

MSCI USA GrowthMSCI USA Value

MSCI EAFE Value Index

MSCI EAFE Value Index MSCI EAFE Growth Index

MSCI USA Growth MSCI USA Value

0.0

25.0

50.0

75.0

100.0

6/01 12/02 6/04 12/05 6/07 12/08 6/10 12/11 6/13 12/14 6/16 9/18

Artisan International Inv 09/30/18

Page 49

Fairfax County Public Schools As of September 30, 2018

Peer Group $ Weighted $ WeightedMedian Median Average Average Difference2

U.S FIXED INCOMEGreat West Portfolio Fund Stable Value 0.89%3 0.50% N/A 0.50%4 N/A N/APIMCO Total Return Adm US Broad Market Core Fixed 0.76% 0.49% 0.42% 0.52% 0.36% 0.24%PIMCO Inflation Response MultiAsst Inst Mixed-Asset Target Alloc Moderate 0.83% 0.90% 0.28% 0.90% 0.48% -0.07%TARGET DATET. Rowe Price Retirement I 2005 I Mixed Asset Target Today5 0.43% 0.52% 0.56% 0.49% 0.54% -0.06%T. Rowe Price Retirement I 2010 I Mixed Asset Target 20105 0.42% 0.43% 0.57% 0.46% 0.53% -0.04%T. Rowe Price Retirement I 2015 I Mixed Asset Target 20155 0.45% 0.47% 0.59% 0.48% 0.53% -0.03%T. Rowe Price Retirement I 2020 I Mixed Asset Target 20205 0.49% 0.54% 0.63% 0.54% 0.56% -0.05%T. Rowe Price Retirement I 2025 I Mixed Asset Target 20255 0.52% 0.54% 0.67% 0.54% 0.57% -0.02%T. Rowe Price Retirement I 2030 I Mixed Asset Target 20305 0.55% 0.57% 0.69% 0.58% 0.61% -0.03%T. Rowe Price Retirement I 2035 I Mixed Asset Target 20355 0.58% 0.59% 0.72% 0.57% 0.60% 0.01%T. Rowe Price Retirement I 2040 I Mixed Asset Target 20405 0.59% 0.60% 0.74% 0.60% 0.64% -0.01%T. Rowe Price Retirement I 2045 I Mixed Asset Target 20455 0.60% 0.60% 0.74% 0.59% 0.62% 0.01%T. Rowe Price Retirement I 2050 I Mixed Asset Target 20505 0.60% 0.60% 0.74% 0.61% 0.64% -0.01%T. Rowe Price Retirement I 2055 I Mixed Asset Target 2055+5 0.60% 0.59% 0.74% 0.59% 0.63% 0.01%U.S. EQUITYiShares S&P 500 Index S&P 500 Index Funds (Passive) 0.04% 0.20% 0.04% 0.26% 0.06% -0.22%Dodge & Cox Stock U.S. Large Cap Core Equity 0.52% 0.75% 0.32% 0.81% 0.46% -0.29%Vanguard Mid Cap Index U.S. Mid Cap Core Equity (Passive) 0.04% 0.11% 0.05% 0.25% 0.06% -0.21%Baron Growth Inst U.S. Mid Cap Growth Equity 1.04% 0.91% 0.72% 0.93% 0.75% 0.11%INTERNATIONAL EQUITYArtisan International Inv International Equity All6 1.18% 0.94% 0.92% 0.97% 0.69% 0.21%

2 Difference column represents the difference between the fund's expense ratio and the Peer Group's average expense ratio.

Fund NameFund's

Expense Ratio

1 All information, unless noted otherwise, was created using Morningstar audited expense ratio data as of December 31, 2017. Since mutual fund expense ratios do not change frequently, AHIC believes this study to be a relevant comparison for up to a year, at which time the data will be updated. For complete information on AHIC methodologies and additional information on the expense ratio distributions, contact your AHIC consultant. Mutual fund expense peer groups were constructed by Investment Metrics, and are consistent with the peer groups shown in other exhibits comparing performance, risk-metrics and a multitude of other characteristics.

3 In lieu of an expense ratio, Great West assumes a margin of 89 basis points on the Portfolio Fund. This reflects the gross investment yield of the assets minus the crediting rate and cost of maintaining regulatory capital requirements.

6 Combines multiple Investment Metrics peer groups.

5 Mixed Asset peer groups utilize prospectus net expense ratio information due to the nature of the asset classand common use of a Fund of Fund structure.

4 Stable value fund average calculated using Hueler Universe data for a mandate size of $1 million in assets.

Cost Analysis

Expense Ratio Peer Group Data1

Page 50

Manager Research

Page 51

September 2018

.

Flash Report

Vanguard Group Inc.

Management Transition Announcement

Recommendation

Aon was informed that, effective September 12, 2018, Joseph Brennan would transfer from his role as head of Equity Index Management to a newly created position as Vanguard’s Global Chief Risk Officer. Due to this transition Rodney Comegys was named the head of Vanguard’s Equity Index Management, replacing Joseph Brennan. Additionally, Manish Nagar will be replacing Rodney Comegys as the head of Risk Management. Joseph Brennan will be reporting directly to Tim Buckley CEO.

We do not find the transition of the management team to be concerning, and therefore, do not recommend any action be taken at this time. Please contact a member of the GIC Equity Team if you have any questions.

Background

Vanguard wanted to create a more centralized risk management effort to oversee all areas of risk at the firm Joseph Brennan, former head of Vanguard’s Equity Index Group, was chosen to oversee all of the risk management functions at the firm, which include Enterprise Risk, Investment Management Risk, Third Party Risk, Cyber Security, and Securities and Fraud Risk. This risk management effort will become an entirely new division at the firm and is scheduled to be fully operational by January 2019. At this time, we have not been given any details regarding the different roles that will fall under this department or the process and procedures that will be put in place to oversee the risk management effort.

Mr. Brennan’s former role as the head of Vanguard’s Equity Index group will be taken over by Rodney Comegys, who was the head of the Risk Management group since 2017, overseeing risk analysis for Fixed Income, Equity Index, and Quantitative Equity Groups. Mr. Comegys has been with the firm since 1999 and was head of investments and Equity Index Group in their Asia Pacific office before becoming the head of the Risk Management group in 2017. As Mr, Comegys takes over as the head of Vanguard’s Equity Index group, his role as head of Risk Management group will be absorbed by Manish Nagar, who will be reporting directly to Mr. Brennan.

The decision to create a new division for the Chief Risk Officer was driven primarily to improve and elevate the overall risk functions of the firm.

Flash Report – Vanguard Group Inc. 2

Disclaimer This document has been produced by Aon Global Investment Management (GIM) Research Team, a division of Aon plc and is appropriate

solely for institutional investors. Nothing in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. It should not be taken as financial advice and action should not be taken as a result of this document alone. Consultants

will be pleased to answer questions on its contents but cannot give individual financial advice. Individuals are recommended to seek

independent financial advice in respect of their own personal circumstances. The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not, under any circumstances, create any

implication that there has been a change in the information set forth herein since the date hereof or any obligation to update or provide amendments hereto. The information contained herein is derived from proprietary and non-proprietary sources deemed by Aon to be reliable

and are not necessarily all inclusive. Aon does not guarantee the accuracy or completeness of this information and cannot be held accountable for inaccurate data provided by third parties. Reliance upon information in this material is at the sole discretion of the reader.

This document does not constitute an offer of securities or solicitation of any kind and may not be treated as such, i) in any jurisdiction where

such an offer or solicitation is against the law; ii) to anyone to whom it is unlawful to make such an offer or solicitation; or iii) if the person

making the offer or solicitation is not qualified to do so. If you are unsure as to whether the investment products and services described within this document are suitable for you, we strongly recommend that you seek professional advice from a financial adviser registered in the

jurisdiction in which you reside. We have not considered the suitability and/or appropriateness of any investment you may wish to make with us. It is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction, including the one in

which you reside.

Aon Hewitt Limited is authorized and regulated by the Financial Conduct Authority. Registered in England & Wales No. 4396810. When distributed in the US, Aon Hewitt Investment Consulting, Inc. (“AHIC”) is a registered investment adviser with the Securi ties and Exchange

Commission (“SEC”). AHIC is a wholly owned, indirect subsidiary of Aon plc. In Canada, Aon Hewitt Inc. and Aon Hewitt Investment

Management Inc. (“AHIM”) are indirect subsidiaries of Aon plc, a public company trading on the NYSE. Investment advice to Canadian investors is provided through AHIM, a portfolio manager, investment fund manager and exempt market dealer registered under applicable

Canadian securities laws. Regional distribution and contact information is provided below. Contact your local Aon representative for contact information relevant to your local country if not included below.

Aon plc/Aon Hewitt Limited

Registered office The Aon Centre

The Leadenhall Building 122 Leadenhall Street

London

EC3V 4AN


200 E. Randolph Street Suite 1500

Chicago, IL 60601 USA

Aon Hewitt Inc./Aon Hewitt Investment

Management Inc. 225 King Street West, Suite 1600

Toronto, ON M5V 3M2

Canada

Copyright © 2018 Aon plc

Appendix

Page 54

· The rates of return contained in this report are shown on an after-fees basis unless otherwise noted. They are geometric and time weighted. Returns for periods longer thanone year are annualized.

· Universe percentiles are based upon an ordering system in which 1 is the best ranking and 100 is the worst ranking.

· Due to rounding throughout the report, percentage totals displayed may not sum up to 100.0%. Additionally, individual fund totals in dollar terms may not sum up to the plantotals.

Notes

Page 55

Past performance is not necessarily indicative of future results.

Unless otherwise noted, performance returns presented reflect the respective fund’s performance as indicated. Returns may be presented on a before-fees basis (gross) or after-fees basis (net). After-fee performance is net of each respective sub-advisors’ investment management fees and include the reinvestment of dividends and interest as indicated onthe notes page within this report or on the asset allocation and performance summary pages. Actual returns may be reduced by AHIC’s investment advisory fees or other trustpayable expenses you may incur as a client. AHIC’s advisory fees are described in Form ADV Part 2A. Portfolio performance, characteristics and volatility also may differ from thebenchmark(s) shown.

The information contained herein is confidential and proprietary and provided for informational purposes only. It is not complete and does not contain certain material informationabout making investments in securities including important disclosures and risk factors. All securities transactions involve substantial risk of loss. Under no circumstances does theinformation in this report represent a recommendation to buy or sell stocks, limited partnership interests, or other investment instruments.

The data contained in these reports is compiled from statements provided by custodian(s), record-keeper(s), and/or other third-party data provider(s). This document is notintended to provide, and shall not be relied upon for, accounting and legal or tax advice. AHIC has not conducted additional audits and cannot warrant its accuracy orcompleteness. We urge you to carefully review all custodial statements and notify AHIC with any issues or questions you may have with respect to investment performance or anyother matter set forth herein.

The mutual fund information found in this report is provided by Thomson Reuters Lipper and AHIC cannot warrant its accuracy or timeliness. Thomson Reuters Lipper Global DataFeed provides comprehensive coverage of mutual fund information directly to Investment Metrics, AHIC’s performance reporting vendor, via the PARis performance reporting

platform. Thomson Reuters Lipper is the data provider chosen by Investment Metrics, and as such, AHIC has no direct relationship with Thomson Reuters Lipper.

Refer to Hedge Fund Research, Inc. www.hedgefundresearch.com for information on HFR indices.

FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” and “FTSE4Good®” are trademarks of the London Stock Exchange Group companies and are used by FTSEInternational Limited under license. The FTSE indices are calculated by FTSE International Limited in conjunction with Indonesia Stock Exchange, Bursa Malaysia Berhad, ThePhilippine Stock Exchange, Inc., Singapore Exchange Securities Trading Limited and the Stock Exchange of Thailand (the "Exchanges"). All intellectual property rights in theFTSE/ASEAN Index vest in FTSE and the Exchanges. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings orunderlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Aon Hewitt Investment Consulting, Inc. (“AHIC”) is a federally registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). AHIC is also registeredwith the Commodity Futures Trade Commission as a commodity pool operator and a commodity trading advisor, and is a member of the National Futures Association. The AHICADV Form Part 2A disclosure statement is available upon written request to:

Aon Hewitt Investment Consulting, Inc.200 East Randolph StreetSuite 1500Chicago, IL 60601

ATTN: AHIC Compliance Officer

Disclaimer

Page 56

presentation materials - fairfax county public schools - suppl pres... · anxious after several key...

Documents