Presentation Materials · 2019-12-18 · 14.8% Medium Value 11.1% Medium Growth 3.3% Small Value...

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Fairfax County Public Schools | Second Quarter 2019

Presentation Materials

Contact Information

Gregory J. Fox, CFA Associate Partner 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 Aon Hewitt Investment Consulting, Inc. 201 Merritt 7, STE 2 Norwalk, CT 06850 t +1 (203) 523-8929 f +1 (203) 523-6750 [email protected]

Connor Keenan Investment Analyst Aon Hewitt Investment Consulting, Inc. 201 Merritt 7, STE 2 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.

Global Equity Markets

Global trade negotiations dominated equity markets in Q2 2019. In local currency terms, the MSCI AC World Investable Market Index returned 3.4% which was supported by prospects of looser monetary policy by major central banks and positive progress in U.S.-China trade negotiations.

Increased expectations of further monetary stimulus from the European Central Bank (ECB) combined with a strengthening of the euro against the U.S. dollar resulted in the European equities being the strongest performer (in USD terms) over the quarter.

Japanese equities delivered positive returns in USD terms due to strong yen performance against the U.S. dollar over the quarter. In local currency terms, however, Japanese equities largely lagged other markets with yen strength and escalating trade tensions leading Japanese equities to be the only equity market to post negative returns in local currency terms over the second quarter. Emerging market equities, especially those with greater linkages to China, came under pressure due to uncertainties around the ongoing trade dispute.

3.4% 2.7%3.9%

0.7% 0.7%

4.5%

1.3%

5.6%4.7%

0.4%

4.6%

0.3%

8.3%

-3.2%

-5.2%

2.2%

6.2%

2.3%

6.9%

0.5%

-10%

0%

10%

ACWI IMI 45.2%ACWI ex-U.S.

IMI

54.8%USA IMI

5.2%UK IMI

7.5%Japan IMI

3.1%Canada IMI

0.2%Israel IMI

13.8%Europe ex-UK

IMI

3.9%Pacific ex-Japan

IMI

11.6%Emerging

Markets IMI

GLOBAL MSCI IMI INDEX RETURNS (USD, Net)AS OF 06/30/2019 Second Quarter 2019 One-Year

Source: MSCI

Page 1


Global Equity Markets

USA54.8%

UK5.2%

Canada3.1%

Pacific ex-Japan3.9%

Japan7.5%

Europe ex-UK13.8%

Israel0.2%

Latin America

1.4%

Asia8.4%

Eastern Europe, Middle East & Africa1.8%

Emerging Markets11.6%

MSCI ALL COUNTRY WORLD IMI INDEX GEOGRAPHIC ALLOCATION AS OF 06/30/2019

Source: MSCI

UK11.4%

Canada6.8%

Pacific ex-Japan8.6%

Japan16.6%

Europe ex-UK30.4%

Israel0.5%

Latin America3.2%

Asia18.6%

Eastern Europe, Middle East & Africa3.9%

Emerging Markets25.7%

MSCI ALL COUNTRY WORLD EX-U.S. IMI INDEX GEOGRAPHIC ALLOCATION AS OF 06/30/2019

Source: MSCI

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.

Page 2


U.S. Equity Markets

4.1% 4.0%

1.4%

6.2%

1.9%

-3.7%

5.7% 4.0%7.0%

3.4%

9.0%11.2%

11.8%

10.4% 10.6%

-16.1%

1.5%

10.0% 9.8%

16.7%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Russell3000

21.4%Technology

13.9%Healthcare

14.4%Cons. Disc

5.7%Cons.

Staples

5.1%Energy

3.4%Materia ls &Processing

10.5%ProducerDurables

20.4%FinancialServices

5.1%Utilities

RUSSELL GICS SECTOR RETURNS AS OF 06/30/2019

Second Quarter 2019

One-Year

Source: Russell Indexes

4.1% 4.2%4.4%

3.2%

5.4%

1.4%

2.7%

9.0%

10.9% 10.8%

3.7%

13.9%

-6.2%

-0.5%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Russell3000

31.0%LargeValue

36.2%Large

Growth

14.8%MediumValue

11.1%MediumGrowth

3.3%SmallValue

3.6%Small

Growth

RUSSELL STYLE RETURNS AS OF 06/30/2019

Second Quarter 2019

One-Year

Source: Russell Indexes

U.S. equities continued their rally despite economic data painting a mixed picture, fueled by the increased expectation for an interest rate cut by the U.S. Federal Reserve (Fed). Greater optimism over thawing U.S.-China trade tensions towards the end of the quarter also helped to lift investor sentiment. The Russell 3000 Index rose 4.1% during the second quarter and 9.0% over the one-year period.

All sectors, except for Energy (-3.7%), generated positive returns over the quarter. In particular, Financial Services (7.0%) and Consumer Discretionary (6.2%) were the best performing sectors in Q2 2019.

Performance was positive across the market capitalization spectrum over the quarter. In general, small cap stocks underperformed both large and medium cap stocks over the quarter. Growth stocks outperformed their Value counterparts in Q2 2019, benefitting from the fall in U.S. yields.

Page 3


U.S. Fixed Income Markets

3.1% 3.0%

4.5%

2.0% 1.7%

3.3%

7.9%7.2%

10.7%

6.2%

5.0%

9.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Barclays Agg.Bond

42.7%Govt

26.2%Corp.

28.5%MBS

0.5%ABS

2.1%CMBS

BLOOMBERG BARCLAYS AGGREGATE RETURNS BY SECTOR AS OF 06/30/2019

Second Quarter 2019 One-YearSource: FactSet

1.5%2.2% 2.6%

3.6%

6.6%

4.3%

6.5%7.5%

9.0%

13.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

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

BLOOMBERG BARCLAYS AGGREGATE RETURNS BY MATURITY AS OF 06/30/2019


2.6%3.3%

4.2%4.8%

2.5%

6.9%

8.5%

10.1%

11.4%

7.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Aaa Aa A Baa High Yield

BLOOMBERG BARCLAYS AGGREGATE RETURNS BY QUALITY AND HIGH YIELD RETURNS AS OF 06/30/2019


The Bloomberg Barclays U.S. Aggregate Bond Index returned 3.1% over the quarter. Corporate bonds were the best performers, returning 4.5% whilst ABS bonds underperformed with a return of 1.7%.

Performance was positive across all credit grades. Within investment grade bonds, lower quality bonds outperformed with Baa bonds returning 4.8%.

Long-maturity bonds outperformed both intermediate and short-maturity bonds over the quarter. Long-maturity bonds returned 6.6% while short-maturity bonds returned only 1.5% in Q2 2019.

Page 4


U.S. Fixed Income Markets

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Jun 09 Jun 11 Jun 13 Jun 15 Jun 17 Jun 19

U.S. 10-YEAR TREASURY AND TIPS YIELDS10Y TIPS Yield

10Y Treasury Yield

Source: U.S. Department of Treasury

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0 5 10 15 20 25 30

Maturity (Years)

U.S. TREASURY YIELD CURVE

6/30/2018

3/31/2019

6/30/2019

Source: U.S. Department of Treasury

The U.S. nominal yield curve shifted downwards over the quarter with yields falling across all maturities. In Q2 2019, 10-year US Treasury yield dipped below 2.0% for the first time since 2016 but ultimately rested at 2.0% at the end of the quarter; a 41bps decrease since the end of March.

The Fed appeared to capitulate to financial market pressure by signaling possible rate cuts this year, with eight out of seventeen officials expecting at least one rate cut in 2019. This came amidst a slowing U.S. economy and elevated risks from the ongoing trade dispute.

The 10-year TIPS yield fell by 22bps over the quarter and ended the period at 0.31%. Breakeven inflation decreased as inflation expectations had moved lower.

Page 5


European Fixed Income Markets

-1%

1%

3%

5%

7%

9%

11%

13%

15%

2013 2014 2015 2016 2017 2018 2019

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

Spain Italy Portugal

Greece Ireland

Source: FactSet

Eurozone government bond spreads over 10-year German bunds generally fell across the Eurozone. ECB officials indicated the possibility of a fresh round of quantitative easing if needed to stimulate the flagging economy.

German government bund yields fell by 26bps to a record low of -0.33% as the country’s manufacturing sector continued in the contraction territory.

Italian government bond yields fell by 41bps to 2.08% over the quarter. The dovish stance from the ECB encouraged greater risk appetite and sent more risky bond yields lower. Minutes from the European Commission meeting on June 5th indicated that the European Commission will hold off disciplinary actions over Italy’s fiscal target and could give additional time until the end of the year to reduce its public debt.

Greek government bond yields reached a record low over the quarter, falling by 130bps to 2.43%.

Page 6


Credit Spreads

Spread (bps) 06/30/2019 03/31/2019 06/30/2018 Quarterly Change (bps) 1-Year Change (bps)

U.S. Aggregate 46 44 44 2 2

Long Gov't 1 1 1 0 0

Long Credit 161 172 174 -11 -13

Long Gov't/Credit 92 99 101 -7 -9

MBS 46 35 28 11 18

CMBS 69 69 70 0 -1

ABS 41 39 47 2 -6

Corporate 115 119 123 -4 -8

High Yield 377 391 363 -14 14

Global Emerging Markets 282 283 288 -1 -6

Source: FactSet, Bloomberg Barclays

Mirroring equity market concern, credit spreads increased in the middle of the quarter but broadly retraced May’s spread widening late in the quarter as investor concerns eased and risk appetite returned.

In Q2 2019, High Yield bond spreads narrowed by 14bps – the largest spread narrowing among credit market we consider here. Despite the spread narrowing, High Yield bonds underperformed investment grade bonds due to the lower duration of the index. Spreads on securitized debt widened slightly, most notably for Mortgage-Backed Securities which increased by 11bps.

Page 7


Currency

80

90

100

110

120

130

140

Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19

U.S. DOLLAR RELATIVE TO EUR, GBP AND JPY REBASED TO 100 AT 06/30/2013

EUR/USD

GBP/USD

JPY/USD

Source: FactSet

Stronger Dollar

Weaker Dollar

80

85

90

95

100

105

110

115

120

125

Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19

TRADE WEIGHTED U.S. DOLLAR INDEX(1973 = 100)

Source: Federal Reserve

The U.S. dollar fell 0.4% on a trade-weighted basis over the quarter, depreciating against all major currencies with the exception of sterling. The upward trend in the U.S. dollar stalled in the second quarter. The dollar fell in June as expectations of Fed easing grew. Cyclical supports to the ‘greenback’ (stronger relative economic growth and wide interest rate differentials) lost momentum.

In the UK, Brexit uncertainties continued as UK Prime Minister Theresa May announced her resignation and the prohibitive favorite, Boris Johnson, has taken a very tough stance on Brexit which has increased expectations of a “Hard-Brexit” by the end of October. Against this backdrop, sterling depreciated by 2.3% against the U.S. dollar.

Despite a more dovish ECB and a weaker economic outlook, the euro appreciated by 1.4% against the U.S. dollar.

The yen strengthened over the quarter as investors moved back to the 'safe-haven' currency. Similar to the Euro Area, there was less disappointment in economic releases over the quarter while the gap between U.S. and Japanese government bond yields narrowed by just under 50bps.

Page 8


Commodities

-1.2%

0.4%

-4.6%

-7.2%

7.1%

4.5%

-0.3%

8.4%

-11.0%

-6.8%

-3.1%

-14.3%

-11.0%

7.6%

-4.2%

-11.8%

-0.2%

-3.5%

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

Bloomberg Commodity Index

Ex-Energy

Energy

Industrial Metals

Prec. Metals

Agric.

Softs

Grains

Livestock

COMMODITY RETURNS AS OF 06/30/2019

Second Quarter 2019

One-Year

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

Commodities generally fell over the quarter with the Bloomberg Commodity Index returning -1.2%.

Livestock (-11.0%) was the worst performing sector whilst Precious Metals (7.1%) returned the most. The latter benefitted from safe-haven buying in a quarter where geopolitical risks rose and gold prices surged by 8.8%.

The Energy sector fell 4.6% over the quarter. The price of Brent crude oil fell by 2.7% to $67/bbl and the WTI crude oil spot price fell by 2.8% to $58/bbl. Oil prices got some support from rising tensions in Middle East as the U.S. re-imposed sanctions on Iran. However, a sharp rise in U.S. crude inventories and, more significantly, signs of slowing global growth put pressure on energy prices. Weaker anticipated demand due to a slowing economic environment also pushed Industrial Metals lower with copper prices falling 7.9% to $5,972/t.

Page 9


Hedge Fund Markets Overview

Hedge fund performance was positive across all strategies in the second quarter.

Over the quarter, Global Macro and Equity Hedge strategies were the best performers with returns of 2.7% and 1.8%.The former’s strong return offset weaker performance over the previous nine months and led to a positive return of 2.6% over the trailing twelve months. Conversely, Distressed-Restructuring and Emerging Markets were the worst performers, returning 1.3% and 1.2%, respectively.

The HFRI Fund-Weighted Composite Index and the HFRI Fund of Funds Composite Index produced returns of 1.9% and 1.7%, respectively.

1.7%

2.7%

1.8%

1.2%

1.4%

1.3%

1.5%

1.9%

1.7%

2.7%

2.6%

0.5%

0.5%

1.3%

-0.1%

3.2%

1.5%

1.4%

-0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

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 06/30/2019

Second Quarter 2019

One-Year

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

Page 10

Fairfax County Public Schools – Summary

This report has been prepared by Aon Hewitt Investment Consulting (AHIC) to provide Fairfax County Public Schools with anobjective, third party review of the historical investment results of the 457(b) Plan.

Asset AllocationThe Fairfax County Public Schools 457(b) Plan currently offers 8 investment options and a series of lifecycle funds. As of June30, 2019, the Plan had 1 guaranteed interest fund, 1 fixed income fund, 1 inflation-sensitive solution, 2 passively-manageddomestic equity funds, 2 actively-managed domestic equity funds, 1 actively-managed foreign equity fund and a series of activelymanaged target date funds. The two passively-managed domestic equity funds cover the following asset classes: large cap coreand mid cap core. The two actively-managed domestic equity funds cover the following asset classes: large cap core and midcap growth. Participants may allocate their investments among the funds in accordance with their own personal tolerance for risk.As of June 30, 2019, the assets of the Plan totaled $241.0 million. The Plan held 13.9% of assets in the guaranteed interestproduct, 7.4% in fixed income, 56.8% in domestic equity, 8.7% in foreign equity and 12.3% in target date funds. The Plan’s assetallocation by fund is detailed later in this report.

Plan PerformanceDuring the second quarter of 2019, trade negotiations dominated global equity markets and the expectation of looseningmonetary policy helped returns. Domestically, the Russell 3000 Index returned 4.1% during the second quarter. All sectors exceptenergy generated positive returns for the quarter, with the Financial (7.0%) and Consumer Discretionary (6.2%) sectorsperforming the best. Performance was positive across all market capitalization spectrums for the quarter, and small cap stocksgenerally underperformed both medium and large cap stocks. Growth stocks outperformed their value counterparts, continuing alonger trend. Emerging markets (0.6%) lagged developed non-U.S. markets during the second quarter, with the MSCI EAFEIndex generating a return of 3.7%. The domestic fixed income market, as represented by Bloomberg Barclays US AggregateBond Index, posted a positive return of 3.1% for the quarter with corporate bonds being the strongest absolute performer (4.5%).Long duration bonds outperformed short and intermediate duration bonds over the quarter.

Page 11


Plan Performance (continued)Against this backdrop the plan’s options generated mostly positive returns while most of the actively managed target date fundsunderperformed their benchmarks.

Longer-term relative performance of most of the Plan’s active investments had generally positive results for the ten-year period ending June 30, 2019. 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+ U.S. rate strategies including duration, curve positioning, and instrument selection.+ Country selection within the eurozone.

PIMCO Inflation Response Multi-Asset Fund underperformed during the quarter- Active commodity strategies- Positions in EM debt

Page 12


Quarterly Fund Attribution (continued)

Dodge & Cox Stock Fund underperformed during the quarter- Overweight position and stock selection in health care sector- Stock selection in technology and consumer discretionary sector

Baron Growth Fund outperformed during the quarter+ Overweight and stock selection in technology sector+ Specific holdings CoStar Group Inc., MSCI Inc., and IDEXX Laboratories, Inc.

Artisan International Fund outperformed during the quarter+ Stock selection in materials, financials, and technology sectors+ Specific holdings Wirecard, AIA, Nestle and Linde

Page 13

Financial ReconciliationAs of June 30, 2019Fairfax County Public Schools

1Market Values may be slightly different as any corrections or adjustments after effective date are not included. 2Loan Fund and Forfeiture Account do not have cash flows available.

2

2

Investments

Market Value As of

04/01/2019 Net Transfers Contributions Distributions

Capital Apprec./ Deprec.

Market Value As of

06/30/2019U.S. FIXED INCOME $49,187,895.81 $923,971.54 $816,461.43 -$480,436.79 $685,512.71 $51,133,404.70Great West Portfolio Fund $32,407,076.15 $455,258.74 $590,279.69 -$408,904.67 $165,448.86 $33,209,158.77PIMCO Total Return Adm $16,478,549.64 $475,923.24 $219,713.45 -$66,655.84 $516,507.02 $17,624,037.51PIMCO Inflation Response MultiAsst Inst $302,270.02 -$7,210.44 $6,468.29 -$4,876.28 $3,556.83 $300,208.42TARGET DATE $27,534,995.94 $421,840.03 $966,749.96 -$198,748.55 $1,019,368.52 $29,744,205.90T. Rowe Price Retirement I 2005 I $681,006.66 $31,316.60 $22,774.86 $0.00 $22,194.65 $757,292.77T. Rowe Price Retirement I 2010 I $64,495.86 -$138.01 $267.71 $0.00 $2,049.78 $66,675.34T. Rowe Price Retirement I 2015 I $1,583,795.66 -$138.43 $21,569.58 -$5,986.48 $53,959.11 $1,653,199.44T. Rowe Price Retirement I 2020 I $6,688,988.82 -$461,323.97 $90,830.30 -$1,360.40 $230,937.20 $6,548,071.95T. Rowe Price Retirement I 2025 I $4,804,942.06 $613,649.83 $196,058.48 -$22,165.00 $188,324.87 $5,780,810.24T. Rowe Price Retirement I 2030 I $3,233,189.09 $27,323.93 $127,769.84 -$652.87 $119,507.81 $3,507,137.80T. Rowe Price Retirement I 2035 I $4,558,474.69 $241,074.56 $177,979.85 -$42,054.19 $177,384.39 $5,112,859.30T. Rowe Price Retirement I 2040 I $2,700,201.27 -$25,879.48 $137,694.38 $0.00 $102,975.46 $2,914,991.63T. Rowe Price Retirement I 2045 I $1,391,803.41 -$1,445.76 $88,321.81 -$49,996.67 $52,346.73 $1,481,029.52T. Rowe Price Retirement I 2050 I $925,332.76 -$140.98 $34,161.49 -$54,327.65 $34,362.79 $939,388.41T. Rowe Price Retirement I 2055 I $902,765.66 -$2,458.26 $69,321.66 -$22,205.29 $35,325.73 $982,749.50U.S. EQUITY $130,561,457.87 -$920,636.69 $2,034,569.44 -$946,024.53 $6,032,516.27 $136,761,882.36iShares S&P 500 Index $35,604,710.14 -$243,837.65 $813,526.81 -$434,900.03 $1,525,602.69 $37,265,101.96Dodge & Cox Stock $27,571,914.37 -$232,295.41 $333,815.16 -$63,227.50 $717,732.22 $28,327,938.84Vanguard Mid Cap Index $35,668,201.05 -$186,274.71 $542,041.11 -$364,236.16 $1,562,425.51 $37,222,156.80Baron Growth Inst $31,716,632.31 -$258,228.92 $345,186.36 -$83,660.84 $2,226,755.85 $33,946,684.76INTERNATIONAL EQUITY $19,597,781.28 -$425,174.88 $266,231.95 -$185,312.55 $1,587,551.28 $20,841,077.08Artisan International Inv $19,597,781.28 -$425,174.88 $266,231.95 -$185,312.55 $1,587,551.28 $20,841,077.08OTHER $2,028,327.65 $2,177,569.37Loan Fund $1,765,700.07 $1,861,871.83Forfeiture Account $262,627.58 $315,697.54

Total 457(b) Plan $228,910,458.55 $4,084,012.78 -$1,810,522.42 $9,324,948.78 $240,658,139.41

Page 14

March 31, 2019 : $229,229,795 June 30, 2019 : $240,973,837

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 130,561,457.86 56.96¢£

International Equity 19,597,781.28 8.55¢£

Domestic Fixed Income 16,478,549.64 7.19¢£

GIC 32,669,689.13 14.25¢£

Real Return 302,270.03 0.13¢£

Loan Fund 1,822,437.69 0.80¢£

Cash 262,612.98 0.11¢£

Life Cycle 27,534,995.93 12.01¢£

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 136,761,882.36 56.75¢£

International Equity 20,841,077.08 8.65¢£

Domestic Fixed Income 17,624,037.51 7.31¢£

GIC 33,524,856.31 13.91¢£

Real Return 300,208.42 0.12¢£

Loan Fund 1,861,871.83 0.77¢£

Cash 315,697.54 0.13¢£

Life Cycle 29,744,205.90 12.34¢£

Fairfax County Public Schools

457(b) Plan

Asset Allocation by Segment

Page 15

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 6/19


Historical Asset Allocation by Segment

April 1, 2010 To June 30, 2019

Total 457(b) Plan

Page 16

Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

Total 457(b) Plan 240,973.84 100.00

U.S. Fixed Income 51,449.10 21.35

Great West Portfolio Fund¹ 33,524.86 13.91 0.48 0.97 1.95 1.95 1.94 1.88 2.12

90 Day U.S. Treasury Bill 0.64 1.24 2.31 1.37 0.85 0.63 0.47

Stable Value Institutional Peer Group 0.55 1.08 2.10 1.81 1.66 1.63 1.89

PIMCO Total Return Adm 17,624.04 7.31 3.15 (35) 5.96 (78) 7.38 (71) 2.91 (26) 2.76 (63) 2.77 (49) 4.43 (50)

Blmbg. Barc. U.S. Aggregate 3.08 (48) 6.11 (68) 7.87 (39) 2.31 (64) 2.95 (40) 2.62 (67) 3.90 (70)

PIMCO Inflation Response MultiAsst Inst 300.21 0.12 1.22 (87) 6.70 (81) 2.93 (63) 3.81 (80) 1.32 (85) 1.41 (94) -

PIMCO IRMA Benchmark 2.35 (56) 7.03 (81) 3.63 (56) 1.63 (96) -0.15 (91) 0.00 (99) 3.18 (95)

Target Date 29,744.21 12.34

T. Rowe Price Retirement I 2005 I 757.29 0.31 3.16 (12) 10.01 (26) 6.86 (24) 6.37 (15) - - -

T. Rowe Price Retirement 2005* 3.12 (14) 9.89 (27) 6.62 (32) 6.22 (18) 4.41 (21) 6.11 (16) 7.55 (18)

T. Rowe Price Retirement 2005 Index 3.23 (11) 9.70 (34) 7.00 (19) 6.25 (18) 4.61 (11) 6.06 (17) 7.19 (27)




T. Rowe Price Retirement I 2015 I 1,653.20 0.69 3.39 (1) 11.51 (1) 6.77 (18) 7.75 (5) - - -







Asset Allocation & Performance

As of June 30, 2019

¹Market value is being sourced from Empower's Plan Service Center and may include corrections and adjustments made after effective date.*Alternate share class shown to illustrate performance history.

Page 17



As of June 30, 2019

Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years




















T. Rowe Price Retirement 2055* 3.66 (28) 16.38 (21) 6.08 (25) 11.82 (6) 7.29 (6) 10.92 (5) 11.97 (-)

T. Rowe Price Retirement 2055 Index 3.81 (12) 16.21 (26) 7.12 (1) 11.82 (6) 7.50 (5) 10.85 (7) 11.74 (-)


Page 18



As of June 30, 2019

Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

U.S. Equity 136,761.88 56.75

iShares S&P 500 Index 37,265.10 15.46 4.29 (22) 18.51 (28) 10.41 (7) 14.16 (10) 10.68 (7) 13.92 (13) 14.61 (18)

S&P 500 Index 4.30 (9) 18.54 (8) 10.42 (6) 14.19 (3) 10.71 (1) 13.98 (1) 14.70 (1)

Dodge & Cox Stock 28,327.94 11.76 2.60 (91) 13.15 (96) 4.14 (95) 14.43 (26) 8.26 (79) 13.89 (26) 14.04 (41)

S&P 500 Index 4.30 (48) 18.54 (40) 10.42 (41) 14.19 (32) 10.71 (21) 13.98 (21) 14.70 (17)

Russell 1000 Value Index 3.84 (69) 16.24 (81) 8.46 (68) 10.19 (94) 7.46 (89) 12.09 (77) 13.19 (66)

Vanguard Mid Cap Index 37,222.16 15.45 4.36 (51) 21.88 (41) 7.85 (42) 12.34 (51) 8.83 (41) 13.39 (31) 15.23 (24)

Vanguard Spliced Mid Cap Index 4.37 (51) 21.90 (41) 7.85 (42) 12.36 (50) 8.85 (41) 13.42 (31) 15.26 (24)

Baron Growth Inst 33,946.68 14.09 7.03 (32) 30.22 (19) 14.51 (33) 18.28 (26) 11.31 (37) 14.55 (39) 15.52 (41)

Baron Growth Rtl* 6.95 (35) 30.05 (20) 14.21 (39) 17.97 (29) 11.02 (40) 14.26 (48) 15.22 (48)

Russell Midcap Growth Index 5.40 (67) 26.08 (58) 13.94 (44) 16.49 (41) 11.10 (39) 14.76 (35) 16.02 (22)

International Equity 20,841.08 8.65

Artisan International Inv 20,841.08 8.65 8.18 (2) 19.34 (16) 8.89 (4) 9.80 (27) 2.99 (33) 7.92 (22) 8.83 (14)

MSCI EAFE Index (Net) 3.68 (58) 14.03 (63) 1.08 (50) 9.11 (36) 2.25 (47) 7.31 (27) 6.90 (44)

MSCI AC World ex USA Index (Net) 2.98 (72) 13.60 (69) 1.29 (49) 9.39 (32) 2.16 (50) 6.36 (63) 6.54 (53)


Page 19

2018 2017 2016 2015 2014 2013 2012 2011 2010

U.S. Fixed Income

Great West Portfolio Fund¹ 1.95 1.95 1.98 2.00 1.86 1.53 2.11 2.55 2.67

90 Day U.S. Treasury Bill 1.87 0.86 0.25 0.03 0.04 0.05 0.08 0.08 0.13

Stable Value Institutional Peer Group 1.94 1.64 1.48 1.45 1.38 1.52 1.93 2.36 2.79

PIMCO Total Return Adm -0.51 (53) 4.87 (7) 2.34 (81) 0.47 (39) 4.43 (81) -2.16 (72) 10.10 (3) 3.91 (95) 8.57 (17)

Blmbg. Barc. U.S. Aggregate 0.01 (19) 3.54 (62) 2.65 (64) 0.55 (30) 5.97 (32) -2.02 (64) 4.21 (77) 7.84 (15) 6.54 (69)

IM U.S. Broad Market Core Fixed Income (MF) Median -0.48 3.80 2.96 0.35 5.76 -1.64 6.06 6.98 7.24

PIMCO Inflation Response MultiAsst Inst -3.71 (24) 8.59 (75) 10.53 (20) -6.77 (78) 1.57 (73) -9.29 (100) 9.56 (64) - -

PIMCO IRMA Benchmark -3.86 (25) 5.08 (91) 6.76 (48) -7.47 (82) -0.34 (82) -8.89 (100) 6.58 (84) 4.56 (11) 12.98 (45)

IM Flexible Portfolio (MF) Median -6.73 12.75 6.53 -3.27 3.80 12.10 11.02 -1.69 12.37

Target Date

T. Rowe Price Retirement I 2005 I -3.12 (44) 10.74 (19) 6.69 (30) - - - - - -

T. Rowe Price Retirement 2005* -3.26 (50) 10.67 (20) 6.72 (30) -0.75 (39) 4.72 (40) 9.74 (24) 11.35 (16) 1.43 (66) 11.51 (18)

T. Rowe Price Retirement 2005 Index -2.58 (24) 10.12 (26) 5.84 (45) -0.10 (20) 5.48 (25) 9.86 (23) 9.52 (41) 2.38 (44) 10.22 (42)

IM Mixed-Asset Target Alloc Consv (MF) Median -3.28 8.83 5.58 -1.13 4.21 7.55 9.04 2.10 9.94


T. Rowe Price Retirement 2010* -3.61 (67) 11.66 (13) 7.11 (11) -0.76 (63) 4.99 (23) 11.93 (8) 12.44 (6) 0.54 (55) 12.70 (4)


IM Mixed-Asset Target 2010 (MF) Median -3.44 10.39 6.22 -0.63 4.49 9.24 9.64 0.90 10.88


T. Rowe Price Retirement 2015* -4.17 (64) 13.34 (12) 7.31 (14) -0.58 (36) 5.37 (32) 15.18 (2) 13.81 (1) -0.32 (81) 13.79 (4)









T. Rowe Price Retirement 2025 Index -5.00 (42) 16.68 (11) 8.21 (9) -0.56 (34) 7.06 (9) 20.01 (4) 14.00 (22) -0.22 (25) 14.12 (26)

IM Mixed-Asset Target 2025 (MF) Median -5.27 15.23 7.19 -0.95 5.52 16.08 13.27 -1.05 13.67






T. Rowe Price Retirement 2035* -6.87 (45) 20.88 (9) 7.64 (66) 0.13 (4) 6.07 (38) 24.86 (3) 17.35 (1) -3.26 (61) 16.34 (1)



Calendar Year Performance

As of June 30, 2019

¹Market Value is sourced from Empower's Plan Service Center and may include corrections and adjustments made after the effective date.Returns for periods greater than one year are annualized.Returns are expressed as percentages.*Alternate share class shown to illustrate performance history.

Page 20


Calendar Year Performance

As of June 30, 2019

2018 2017 2016 2015 2014 2013 2012 2011 2010















T. Rowe Price Retirement 2055* -7.62 (23) 22.33 (20) 7.73 (73) 0.18 (4) 6.18 (40) 25.86 (13) 17.60 (1) -3.35 (16) 16.41 (-)

T. Rowe Price Retirement 2055 Index -6.96 (5) 21.02 (65) 9.70 (14) -0.98 (45) 7.43 (11) 24.73 (31) 15.66 (60) -1.46 (1) 15.17 (-)

IM Mixed-Asset Target 2055 (MF) Median -8.28 21.51 8.53 -1.26 5.70 23.17 15.73 -4.33 -

U.S. Equity

iShares S&P 500 Index -4.38 (7) 21.77 (19) 11.92 (19) 1.35 (19) 13.61 (14) 32.21 (28) 15.84 (33) 1.98 (41) 14.92 (36)

S&P 500 Index -4.38 (7) 21.83 (3) 11.96 (8) 1.38 (7) 13.69 (1) 32.39 (3) 16.00 (3) 2.11 (8) 15.06 (1)

IM S&P 500 Index (MF) Median -4.55 21.64 11.79 1.23 13.47 32.11 15.77 1.96 14.82

Dodge & Cox Stock -7.07 (79) 18.33 (81) 21.28 (1) -4.49 (94) 10.40 (73) 40.55 (1) 22.01 (2) -4.08 (90) 13.49 (55)

S&P 500 Index -4.38 (33) 21.83 (40) 11.96 (28) 1.38 (37) 13.69 (22) 32.39 (45) 16.00 (41) 2.11 (27) 15.06 (34)

Russell 1000 Value Index -8.27 (89) 13.66 (97) 17.34 (4) -3.83 (93) 13.45 (23) 32.53 (43) 17.51 (18) 0.39 (53) 15.51 (30)

IM U.S. Large Cap Core Equity (MF) Median -5.16 21.28 10.35 0.70 11.89 32.14 15.39 0.65 13.90

Vanguard Mid Cap Index -9.24 (49) 19.29 (48) 11.23 (56) -1.33 (41) 13.78 (9) 35.17 (51) 16.01 (44) -1.96 (41) 25.67 (31)

Vanguard Spliced Mid Cap Index -9.22 (49) 19.30 (48) 11.25 (56) -1.28 (40) 13.83 (9) 35.21 (51) 16.04 (43) -1.91 (39) 25.69 (31)

IM U.S. Mid Cap Equity (MF) Median -9.73 18.74 12.12 -2.40 8.04 35.22 15.35 -3.28 23.83

Baron Growth Inst -2.67 (28) 27.35 (30) 6.31 (44) -4.06 (83) 4.66 (78) 38.69 (23) 16.74 (20) 1.51 (12) 24.32 (53)

Baron Growth Rtl* -2.92 (30) 27.04 (31) 6.04 (49) -4.31 (85) 4.40 (79) 38.32 (25) 16.43 (24) 1.24 (14) 24.01 (55)

Russell Midcap Growth Index -4.75 (49) 25.27 (45) 7.33 (35) -0.20 (52) 11.90 (12) 35.74 (47) 15.81 (33) -1.65 (34) 26.38 (38)

IM U.S. Mid Cap Growth Equity (MF) Median -4.85 24.84 5.76 0.10 7.37 35.61 14.40 -3.36 24.38

International Equity

Artisan International Inv -10.86 (14) 31.02 (16) -9.66 (100) -3.85 (80) -0.97 (12) 25.18 (7) 25.39 (4) -7.26 (19) 5.91 (67)

MSCI EAFE Index (Net) -13.79 (38) 25.03 (57) 1.00 (50) -0.81 (47) -4.90 (45) 22.78 (14) 17.32 (67) -12.14 (51) 7.75 (52)

MSCI AC World ex USA Index (Net) -14.20 (42) 27.19 (39) 4.50 (17) -5.66 (85) -3.87 (28) 15.29 (81) 16.83 (70) -13.71 (75) 11.15 (24)

IM International Large Cap Equity (MF) Median -14.91 25.92 0.98 -1.33 -5.01 20.52 19.13 -11.99 7.88

¹Market Value is sourced from Empower's Plan Service Center and may include corrections and adjustments made after the effective date.Returns for periods greater than one year are annualized.Returns are expressed as percentages.*Alternate share class shown to illustrate performance history.

Page 21

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 14.0 16.0 18.0 20.0Annualized Standard Deviation


Risk Profile

3 Years Ending June 30, 2019

*Alternate share class shown to illustrate performance history.

Page 22

Fairfax County Public Schools – Watch List Review

Organization/Staff Process Performance Watch List Status

Overall Manager Research

Rating

Significant Organizational

Change

Adverse Change in Portfolio

Manager

Diverged from Strategy and/or

Portfolio Characteristics

Underperformed / Adverse Tracking During Trailing 5-

Years

Underperformed / Adverse Tracking in 3 of 4 Trailing

Calendar Quarters

2nd Quarter

2019

1st Quarter

2019

4th Quarter

2018

3rd Quarter

2018

U.S FIXED INCOME

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

PIMCO Total Return Adm No No No Yes No Buy Green Yellow Green Green

PIMCO Inflation Response MultiAsst Inst No No No No No Buy Green Green Green Green

TARGET DATE

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

U.S. EQUITY

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

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

Vanguard Mid Cap Index No No No No No Buy Green Green Green Green

Baron Growth Instl No No No No No Qualified Green Green Green Green

INTERNATIONAL EQUITY

Artisan International Inv No No No No No Buy Green Green Green Green

Status Number of Criteria Met Suggested ActionGreen 1 or less affirmatives Active – No action required

Yellow 2 to 3 affirmatives Active – On “closely monitored list”

Red 4 or more affirmatives or “Yellow” for 4 consecutive quarters Full fund review and recommendation for action will be made

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.

Page 23

Watch List Guidelines

AHIC Investment Option Review Criteria1. 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 quarters3. If the Fund diverged from its strategy and / or portfolio characteristics4. Adverse change in portfolio manager5. Merger with another fund6. Significant organizational change

Suggested Action Triggers1. 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 Circumstances1. 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 24

Fairfax County Public Schools 457(b) Plan As of June 30, 2019

Investment Option Participants Investment Options Participants

Great West Portfolio 951 One 670

PIMCO Total Return 981 Two 377

PIMCO Inflation Response MultiAsst 50 Three 259

T. Rowe Price Retirement I 2005 I 33 Four 290

T. Rowe Price Retirement I 2010 I 17 Five 260

T. Rowe Price Retirement I 2015 I 39 Six 232

T. Rowe Price Retirement I 2020 I 92 Seven 164

T. Rowe Price Retirement I 2025 I 124 Eight 22

T. Rowe Price Retirement I 2030 I 114 More than Eight 38

T. Rowe Price Retirement I 2035 I 146



T. Rowe Price Retirement I 2050 I 63 Item Result

T. Rowe Price Retirement I 2055 I 81 Participation Rate 56.49%

iShares S&P 500 Index 957 Number of Participants with Account Balances 2,312

Dodge & Cox Stock 907 Average Deferral Rate 16.71%

Vanguard Mid Cap Index 1,123 Average Number of Funds per Participant 3.39

Baron Growth 988 Average Account Balance $103,149.03

Artisan International 965

Investment Option Participants

Great-West Portfolio Fund 82

PIMCO Total Return Admin 112

PIMCO Inflation Response MultiAsst 7












iShares S&P 500 Index 84

Dodge & Cox Stock 59

Vanguard Mid Cap Index Ins 85

Baron Growth Instl 86

Artisan International Inv 85

* 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 25

457(b) Plan Statistics

457(b) 403(b) Contributions June 2017 $ 1,575,000 $ 3.9 million Contributions June 2018 $ 1,503,000 $ 4.1 million Contributions July 2019 $ 492,000 $ 1.2 million Assets June 30, 2017 $201.5 million Assets June 30, 2018 $224.1 million Assets July 31, 2019 $240.0 million Number of Participants June 2017 2255 13,165 Number of Participants June 2018 2276 13,221 Number of Participants June 2019 2316 13,277 Average Contribution/Month – June 2017 $1086/mo; $236/biweek Average Contribution/Month – June 2018 $1088/mo; $263/biweek Average Contribution/Month – June 2019 $1073/mo; $259/biweek

403(b)

Average Contribution/Month – June 2019 $736/mo; $198/biweek Number of Employees Currently Contributing to 457(b): 1281/mo; 57/biweek Number of Employees Currently Contributing to 403(b): 5418/mo; 649/biweek Number of Employees Currently Contributing to both 457 & 403(b): 436 total

Page 26

457 Plan Participants

Age Monthly Bi-Weekly<21 0 021-25 8 026-30 52 031-35 88 136-40 145 541-45 141 346-50 226 1251-55 206 1556-60 211 861-65 155 1066-70 41 271-75 6 176-80 2 0

Total 1281 57

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

llmen

t

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

llmen

t

Age Range

457 Bi-Weekly Plan Participants

Page 27

403(b) Plan Participants

Age Monthly Bi-Weekly<21 0 121-25 40 426-30 322 431-35 568 2136-40 719 3541-45 707 6546-50 955 8151-55 773 13656-60 667 13661-65 494 10266-70 135 3571-75 29 1276-80 9 1381-85 0 486-90 0 0

Total 5418 649

0

200

400

600

800

1000

1200

<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

ent

Age Range

403(b) Monthly Plan Participants

0

20

40

60

80

100

120

140

160

<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

llmen

t

Age Range

403(b) Bi-Weekly Plan Participants

Page 28

Fairfax County Public Schools 457(b) Plan

Contribution Analysis

Stable Value14%

Fixed Income6%

Real Return0%

Large Cap Blend (Passive)

21%

Large Cap Blend (Active)

8%Mid Cap Blend (Passive)13%

Small Cap Growth8%

International6%

Lifecycle24%

2nd Quarter 2019 Contribution Allocation

Stable Value14%

Fixed Income6%

Real Return0%

Large Cap Blend (Passive)

19%

Large Cap Blend (Active)

8%

Mid Cap Blend (Passive)13%

Small Cap Growth9%

International7%

Lifecycle24%

1st Quarter 2019 Contribution Allocation

Page 29

Relative Ranking (3 Years Rolling) Relative Performance (07/01/09 to 06/30/19)

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

9/14 3/15 9/15 3/16 9/16 3/17 9/17 3/18 9/18 6/19 Cumulative Annualized Over/Under Relative Performance

Over/Under Performance

0.0

3.0

6.0

9.0

-3.0

-6.0

Re

turn

(%)

7/09 7/10 7/11 7/12 7/13 7/14 7/15 7/16 7/17 7/18 6/19

Number ofObservations

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

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

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

Style History Jun-2019 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 6/19

PIMCO Total Return Adm 06/30/19

Page 30

Relative Ranking (3 Years Rolling)

Relative Performance (09/01/11 to 06/30/19)


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

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 12/18 3/19 6/19


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

PIMCO Inflation Response MultiAsst Inst 20 1 0 13 N/A 20

PIMCO IRMA Benchmark 20 0 0 20 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 3/19 6/19

PIMCO Inflation Response MultiAsst Inst 06/30/19

Page 31

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 32

Target Allocation: T. Rowe Price Retirement Funds

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

Fixed Income 61.5% 65.0% 59.5% 52.5% 43.0% 34.5% 26.5% 20.0% 15.0% 11.5% 11.5% 11.5% 11.5%

T. Rowe Price Dynamic Global Bond Fund 3.2% 4.6% 4.3% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.1% 1.1% 1.1% 1.1%

T. Rowe Price Emerging Markets Bond Fund 3.9% 5.7% 5.2% 4.7% 4.0% 3.2% 2.4% 1.8% 1.1% 0.7% 0.7% 0.7% 0.7%

T. Rowe Price Floating Rate Fund 1.0% 1.5% 1.3% 1.2% 1.0% 0.9% 0.7% 0.5% 0.3% 0.2% 0.2% 0.2% 0.2%

T. Rowe Price High Yield Fund 1.8% 2.7% 2.4% 2.1% 1.7% 1.3% 0.9% 0.6% 0.3% 0.1% 0.1% 0.1% 0.1%

T. Rowe Price International Bond Fund 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

T. Rowe Price International Bond Fund (USD Hedged) 4.3% 6.2% 5.8% 5.4% 4.8% 4.1% 3.3% 2.7% 2.0% 1.5% 1.5% 1.5% 1.5%

T. Rowe Price Limited Duration Inflation Focused Bond

Fund 29.8% 18.8% 16.3% 12.8% 7.8% 4.3% 1.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

T. Rowe Price New Income Fund 14.7% 21.5% 20.1% 18.4% 16.3% 14.0% 11.4% 9.2% 6.9% 5.3% 5.3% 5.3% 5.3%

T. Rowe Price U.S. Treasury Long-Term Fund 2.8% 4.0% 4.0% 3.9% 3.8% 3.7% 3.4% 3.1% 2.7% 2.3% 2.3% 2.3% 2.3%

T. Rowe Price U.S. Treasury Money Fund 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%

U.S. Equity 25.3% 23.0% 26.6% 31.2% 37.5% 43.1% 48.3% 52.6% 55.9% 58.2% 58.2% 58.2% 58.2%

T. Rowe Price Equity Index 500 Fund 18.8% 17.1% 19.8% 17.4% 16.8% 14.3% 11.7% 9.7% 7.6% 6.5% 6.5% 6.5% 6.5%

T. Rowe Price Growth Stock Fund 0.0% 0.0% 0.0% 2.9% 5.6% 8.9% 12.1% 14.7% 17.1% 18.5% 18.5% 18.5% 18.5%

T. Rowe Price Mid-Cap Growth Fund 1.7% 1.6% 1.8% 2.1% 2.5% 2.9% 3.3% 3.6% 3.8% 4.0% 4.0% 4.0% 4.0%

T. Rowe Price Mid-Cap Value Fund 1.6% 1.5% 1.7% 2.0% 2.4% 2.8% 3.1% 3.4% 3.6% 3.8% 3.8% 3.8% 3.8%

T. Rowe Price New Horizons Fund 1.1% 1.0% 1.1% 1.4% 1.6% 1.9% 2.1% 2.3% 2.4% 2.5% 2.5% 2.5% 2.5%

T. Rowe Price Small -Cap Stock Fund 1.1% 1.0% 1.1% 1.3% 1.6% 1.8% 2.0% 2.2% 2.3% 2.4% 2.4% 2.4% 2.4%

T. Rowe Price Small-Cap Value Fund 1.0% 0.9% 1.1% 1.3% 1.5% 1.7% 1.9% 2.1% 2.2% 2.3% 2.3% 2.3% 2.3%

T. Rowe Price Value Fund 0.0% 0.0% 0.0% 2.9% 5.5% 8.8% 12.0% 14.6% 16.9% 18.3% 18.3% 18.3% 18.3%

Non-U.S. Equity 12.3% 11.2% 13.0% 15.2% 18.3% 21.0% 23.5% 25.6% 27.2% 28.3% 28.3% 28.3% 28.3%

T. Rowe Price Emerging Markets Stock Fund 2.0% 1.9% 2.1% 2.5% 3.0% 3.5% 3.9% 4.2% 4.5% 4.7% 4.7% 4.7% 4.7%

T. Rowe Price International Stock Fund 3.2% 2.9% 3.4% 4.0% 4.8% 5.5% 6.2% 6.7% 7.1% 7.4% 7.4% 7.4% 7.4%

T. Rowe Price International Value Equity Fund 3.5% 3.2% 3.7% 4.3% 5.1% 5.9% 6.6% 7.2% 7.6% 8.0% 8.0% 8.0% 8.0%

T. Rowe Price Overseas Stock Fund 3.6% 3.3% 3.8% 4.5% 5.3% 6.1% 6.9% 7.5% 8.0% 8.3% 8.3% 8.3% 8.3%

Real Assets 0.9% 0.8% 0.9% 1.1% 1.3% 1.5% 1.7% 1.8% 1.9% 2.0% 2.0% 2.0% 2.0%

T. Rowe Price Real Assets Fund 0.9% 0.8% 0.9% 1.1% 1.3% 1.5% 1.7% 1.8% 1.9% 2.0% 2.0% 2.0% 2.0%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Page 33




TRP Retirement 2005 TRP Retirement 2005 Index

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

TRP Retirement 2005 20 20 15 0 N/A 11

TRP Retirement 2005 Index 20 20 17 0 9 N/A


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TRP Retirement 2005 06/30/19

Alternate share class shown to illustrate performance history.

Page 34





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Page 35





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Page 36





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Page 37





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Page 38





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Page 39





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Page 40





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Page 41





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Page 42





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Page 43




iShares S&P 500 Index S&P 500 Index

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

iShares S&P 500 Index 20 20 20 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


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iShares S&P 500 Index 06/30/19

Page 44




Dodge & Cox Stock S&P 500 Index

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Dodge & Cox Stock 20 14 10 2 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



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Dodge & Cox Stock 06/30/19

Page 45




Vanguard Mid Cap Index Vanguard Spliced Mid Cap Index

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Vanguard Mid Cap Index 20 15 9 0 N/A 0

Vanguard Spliced Mid Cap Index 20 18 10 0 20 N/A


Cap

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Large Cap Growth


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Vanguard Mid Cap Index 06/30/19

Page 46




Baron Growth Rtl Russell Midcap Growth Index

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Cap

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Baron Growth Rtl 06/30/19


Page 47




Artisan International Inv

MSCI EAFE Index (Net)

MSCI AC World ex USA Index (Net)

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Cumulative Annualized Over/Under Relative Performance


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Artisan International Inv 20 9 5 7 N/A 9 10

MSCI EAFE Index (Net) 20 15 0 0 11 N/A 12

MSCI AC World ex USA Index (Net) 20 8 2 7 10 8 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

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Artisan International Inv 06/30/19

Page 48

Fairfax County Public Schools As of June 30, 2019

Peer Group $ Weighted $ Weighted

Median Median Average Average Difference2

U.S FIXED INCOME

Great West Portfolio Fund Stable Value 0.89% 0.47% N/A 0.47% N/A N/A

PIMCO Total Return Adm U.S. Broad Market Core Fixed Income 0.69% 0.48% 0.42% 0.53% 0.35% 0.16%

PIMCO Inflation Response MultiAsst Inst Flexible Portfolio 0.71% 1.00% 1.00% 1.19% 0.97% 0.00%

TARGET DATE

T. Rowe Price Retirement I 2005 I Mixed-Asset Target Today (Active) 0.40% 0.55% 0.52% 0.56% 0.53% -0.16%

T. Rowe Price Retirement I 2010 I Mixed-Asset Target 2010 (Active) 0.39% 0.40% 0.54% 0.43% 0.48% -0.04%







T. Rowe Price Retirement I 2045 I Mixed-Asset Target 2045 (Active) 0.59% 0.57% 0.59% 0.59% 0.58% 0.00%



U.S. EQUITY

iShares S&P 500 Index S&P 500 Index (Passive) 0.03% 0.20% 0.04% 0.27% 0.04% -0.24%

Dodge & Cox Stock U.S. Large Cap Core Equity 0.52% 0.73% 0.31% 0.80% 0.42% -0.28%

Vanguard Mid Cap Index U.S. Mid Cap Core Equity (Passive) 0.04% 0.09% 0.05% 0.21% 0.05% -0.17%

Baron Growth Inst U.S. Mid Cap Growth Equity 1.03% 0.91% 0.71% 0.93% 0.76% 0.10%

INTERNATIONAL EQUITYArtisan International Inv International Equity All 1.18% 0.91% 0.63% 0.94% 0.66% 0.24%

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, 2018. 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 class

and 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.

7 Please note that this is the net expense ratio excluding interest expense. Interest expense can result from portfolio investment transactions and is not paid to PIMCO.

Cost Analysis

Expense Ratio Peer Group Data1

Page 49

Active & Passive Investment Management

1Source: Vanguard “How America Saves – Vanguard 2017 Defined Contribution Data”2Index Core refers to a passive tier of options that at the minimum includes: large cap U.S. equity, broad market fixed income and developed non-U.S. equity3Pensions & Investments – Special Report: DC Money Managers “Passive Assets DC Plans Spur 8.6% Jump Overall”; Robert Steyer – August 21, 2017.

Can add value in less efficient markets

Higher Management

Fees

Opportunity to protect

capital and avoid troubled

areas

Active Management

Provides diversification

within efficient markets

Low Management

Fees

Less decision making for the

investor

PassiveManagement

2

“Defined contribution plan money managers reported a surge in passive assets under

management last year compared to 2015.”-Pensions & Investments3

Plans offering Passive Funds1

61%55%

64% 66%

74%

57%

49%

62%65%

73%

0%

10%

20%

30%

40%

50%

60%

70%

80%

All < 500 500–999 1,000–4,999 5,000+

Plans offering Passive Funds1

Percentage of Plans Offering an Index Core

Percentage of Plans Offering an Index Core and Target-Date Funds

Page 50

Active Manager Scorecard – Peer Ranking of Benchmark Returns1

As of June 30, 2019

Index Legend

Top Quartile

2nd Quartile

3rd Quartile

4th Quartile

1Source: eVestment Peer Universes

• Active management performance relative to indices during 2Q 2019 was mixed. Active managers in U.S. all- and large- cap equityunderperformed indices during the quarter and all other periods especially for the trailing 10 years. While US small- and mid-cap active managers outperformed their relative indices this quarter, they have struggled to outperform year-to-date and trailing 5-year period. Non-U.S. and emerging markets equity outperformed indices during the quarter and year-to-date but underperformed over the trailing 1- and 3- year periods. Non-U.S. equity outperformed indices in the 5- and 10-year periods while emerging markets equity outperformed only over the trailing 10 years. Global Equity continued to struggle and underperform the index over all periods, especially over the trailing 3-year period. All styles but core active fixed income underperformed indices during the quarter. Core fixed income outperformed over all periods while long credit fixed income outperformed year-to-date and over the trailing 10 years. High yield struggled to outperform the index during the quarter and all other periods, especially over the 3-, 5-, and 10- year periods.

• Aon recommends plan sponsors consider passive options where active management does not reliably add value.

Peer Group/Index Qtr YTD 1 Year 3 Years 5 Years 10 Years Qtr YTD 1 Year 3 Years 5 Years 10 YearsAll Cap Equity/ Russell 3000 Index 4.1% 18.7% 9.0% 14.0% 10.2% 14.7% 50% 46% 39% 36% 30% 25%Large Cap Equity/ Russell 1000 Index 4.2% 18.8% 10.0% 14.1% 10.5% 14.8% 46% 39% 36% 37% 33% 29%Large Cap Equity/ S&P 500 Index 4.3% 18.5% 10.4% 14.2% 10.7% 14.7% 44% 42% 34% 37% 30% 30%Mid Cap Equity/ Russell Midcap Index 4.1% 21.3% 7.8% 12.2% 8.6% 15.2% 56% 42% 43% 51% 44% 33%Small Cap Equity/ Russell 2000 Index 2.1% 17.0% -3.0% 12.3% 7.1% 13.5% 62% 49% 53% 41% 45% 58%Global Equity/ MSCI ACWI 3.8% 16.6% 6.3% 12.2% 6.7% 10.7% 44% 46% 42% 29% 37% 48%Non-U.S. Equity/ MSCI ACWI ex-US 3.2% 14.0% 1.8% 9.9% 2.6% 7.0% 51% 57% 29% 38% 59% 70%Emerging Markets Equity/ MSCI EM 0.6% 10.6% 1.2% 10.7% 2.5% 5.8% 69% 62% 47% 32% 44% 66%Core Fixed Income/ Bloomberg Barclays Aggregate 3.1% 6.1% 7.9% 2.3% 2.9% 3.9% 54% 74% 51% 65% 56% 79%Long Credit/ Bloomberg Barclays Long Credit 7.0% 15.4% 15.0% 5.3% 5.8% 8.4% 40% 53% 45% 36% 45% 68%Intermediate FI/ Bloomberg Barclays Intermediate Gov/Credit 2.6% 5.0% 6.9% 2.0% 2.4% 3.2% 31% 57% 28% 58% 50% 63%High Yield FI/ Bloomberg Barclays High Yield 2.5% 9.9% 7.5% 7.5% 4.7% 9.2% 46% 42% 35% 22% 26% 20%

Peer Ranking of Index ReturnIndex Return

Page 51

Proprietary & Confidential Investment advice and consulting services provided by Aon Hewitt Investment Consulting, Inc., an Aon Company. 3

Growth vs. Value Equity Investing

Historically, plan sponsors looked to offer options on both sides of the Morningstar Style Box at each capitalization level

Research¹ shows that participants generally do not know when to favor value vs. growth investment strategies

The DC marketplace continues to trend toward offering a streamlined, objective-based investment menu

¹Aon Hewitt's 2014 Joint Study with Financial Engines – “Help in Defined Contribution Plans: 2006 through 2012 “

In recent years, plan sponsors have considered this principle opportunistically, especially when considering termination or replacement of an existing fund

Depending on the economic environment, different investment philosophies can be in favor.

Large Cap (Russell 1000 Indexes)

Growth 52%

Value 48%

Percentage of Quarterly Outperformance (3/1/1979 – 6/30/2019)

Growth strategies: Focus on projected future earnings Concentrated in areas like information

technology and healthcare

Value strategies: Focus on relative price Concentrated in areas like financials and

consumer staples

Page 52

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

Growth vs. Value

Saver Behaviors from 2005 to 2017 The number of investment held by Savers has dropped

from 3.5 funds in 2005 to 2.5 at the end of 2017 From May 1998 to 2008 Value outperformed Growth

by average of 6.9% From mid-2008 until mid-2019 Growth outperformed

Value

If a Saver on average selects only 2-3 funds to build a portfolio, then the chance of selecting an equity option with only a Growth or Value focus is much higher

Source: Vanguard - 2018 How America Saves

3.5

2.52.0

2.5

3.0

3.5

4.0

Average Number of Funds Held by Savers

Avg. Number of Funds Held by Participants

Source: Russell 1000 Growth Index vs Russell 1000 Value Index

-15

-10

-5

0

5

10

15

20 Rolling 5-Year Performance Comparison

Large Cap Value Outperforms

Large Cap Growth Outperforms

Page 53

Manager Research

Page 54

Proprietary and Confidential

See the last page of this report for disclosures.

Aon InBrief: Dodge & Cox Dodge & Cox U.S. Equity

Review Date Overall Rating Previous Overall Rating August 2019 Buy No Change

Overall Rating The Dodge & Cox US Equity strategy, including the Stock Fund, is Buy rated and we continue to believe that it is an attractive option for clients that seek an equity strategy with a slight value tilt and a high probability of outperforming the benchmark over a full market cycle. We have high conviction in Dodge & Cox’s approach to research and portfolio construction and believe that it is well-positioned to continue adding value versus its benchmark and peer universe.

Component Ratings Relative Performance to 31 Mar 2019

Rating Previous Rating

Aon InForm Assessment

Business 4 No Change

Staff 4 No Change

Process 3 No Change

Risk 3 No Change

ODD Pass No Change -

Performance 3 No Change

T&C 3 No Change

ESG 2 No Change -

Composite performance (USD) is gross of fees relative to Russell 1000 Value. CY = calendar year. Source: eVestment

Firm and Strategy Summary

Head Office Location San Francisco, CA, US Parent Name 100% Employee Owned Firm AUM $285.9 billion Equity AUM $145.9 billion Team Location San Francisco, CA, US Team Head Team Managed Strategy Inception January 1965 Strategy Size $84.8 billion Number of Holdings 69 Annual Turnover 13.6% Benchmark Russell 1000 Value Performance Objective To outperform the benchmark over a market cycle Risk Tolerance Target Unconstrained Note: AUM data as of 31 December 2018. Past performance is no guarantee of future results.

-2.6%

0.0%

3.8%4.8%

1.8%

-1.9%

3.7%

1.3%

-5.0%

0.0%

5.0%

10.0%

CY14 CY15 CY16 CY17 CY18 YTD 3yr(p.a.)

5yr(p.a.)

Aon InBrief – Dodge & Cox – Dodge & Cox U.S. Equity 2

Investment Manager Evaluation

Rating Sheet

Factor Rating Previous Rating Comments

Business 4 No Change

We continue to have a high opinion of the firm’s overall business, which has remained stable. Asset flows across strategies have remained steady and the approach to product development has been conservative, as reflected by the firm’s desire to maintain products that are well-aligned with the investment teams’ capabilities. In addition, we have a favorable view of the firm’s structure, which promotes a wide distribution of ownership and leadership opportunities.

Investment Staff 4 No Change

We believe the Investment Policy Committee (IPC) and industry analysts to be of a very high caliber. In addition to experiencing little turnover historically, the team has continued to demonstrate deep sector- and stock-specific expertise as well as a best-in-class approach to valuation and fundamental analysis. The firm continues to increase capabilities through the steady addition of staff members of the same high competency as those currently on the team.

Investment Process 3 No Change

The process is centered on the concept of a “360 degree” review of companies, which involves a thorough vetting of company management, financial modeling of all portfolio candidates, and an extensive review of financial and corporate governance documentation. The depth of the team’s sector and stock-specific expertise, coupled with the team’s integration of fixed income analysis, are factors that we view positively. However, the stock approval process, which requires the approval of all members of the Investment Policy Committee, is an area of continued monitoring. While this approval process ensures a thorough vetting of ideas, it also risks potential losses of efficiency and accountability.

Risk Management 3 No Change

Dodge & Cox developed a proprietary risk model to better assess risk from a portfolio and individual stock basis. This output is formally utilized in portfolio construction decisions made by the Investment Policy Committee. We view the increased risk awareness favorably.

Operational Due Diligence Pass No Change All systems, policies, and procedures are adequate.


Rating Sheet

Factor Rating Previous Rating Comments

Performance Analysis 3 No Change

Given that the strategy’s investment approach focuses on companies with average to below-average valuations, we would expect some underperformance as valuation disparities widen. The market environment most conducive to the process is when these disparities narrow.

Terms & Conditions 3 No Change Fees for both the mutual fund (DODGX) and separate account are highly attractive for an institutional large cap value manager. Client service has remained satisfactory.

Overall Rating Buy No Change

The Dodge & Cox US Equity strategy, including the Stock Fund, is Buy rated and we continue to believe that it is an attractive option for clients that seek an equity strategy with a slight value tilt and a high probability of outperforming the benchmark over a full market cycle. We have high conviction in Dodge & Cox’s approach to research and portfolio construction and believe that it is well-positioned to continue adding value versus its benchmark and peer universe.

ESG 2 No Change The Fund Management Team is aware of potential ESG risks in the investment strategy and has taken some steps to identify, evaluate and potentially mitigate these risks.


Manager Updates and Monitoring

Major Developments

There are no major developments to report.

Key Monitoring Points

There are no key monitoring points to note at this time.

Aon InForm Assessment

The Aon InForm assessment of this strategy is summarized in the sections below. Where this raises an alert, denoted by a flag (), we have added further clarification where we believe the points raised are material or worth highlighting.

There were no flagged sub-categories during the quarter.


Aon InForm Assessment to 31 Mar 2019

Business InForm Barometer

( | & | represents prior quarter) Current Value

(Threshold for )

Employee Ownership 100.0% (50.0%)

Last Change of Ownership - - ---

Institutional Client Base (Product) 82.2% (50.0%)*

Firm Net Asset Flow $566.1 million ($0)

Firm Gross Asset Outflow -0.2% (-7.0%)

Product Net Asset Flow -$440.0 million ($0)

Product Gross Asset Outflow -0.2% (-7.0%)

Product Importance to Firm 29.7% (2.4%)*

Asset Class Importance to Firm 51.0% (25.0%)*

*Data as of 31 December 2018

Investment Staff InForm Barometer


(Threshold for )

Team Size Portfolio Managers: 10

Analysts: 21 (*)

Staff Turnover Portfolio Managers: 2.8%

Analysts: 1.6% (*)

Experience Portfolio Managers: 26 years

Analysts: 14 years (*) * Team Size: Staff resources allocated relative to the product's AUM is similar or greater than its peer group median

Staff Turnover: The weighted average turnover of PMs/Dual role PMs and analysts over the past 3 years is similar or lower than the cutoff of 7.5%

Experience: The weighted average experience between PMs/Dual role PMs and Analysts is below its peer group median


Aon InForm Assessment to 31 Mar 2019 (Continued)

Investment Process InForm Barometer


(Threshold for )

Active Risk / Tracking Error 4.2% (3.5%)

Investment Process Consistency Consistent (*)

Style Consistency - Market Capitalization $41.4 billion (*)

Style Consistency - Value (Price-to-book) 1.9 (*)

Cash Allocation 4.6% (4.4%)

* Investment Process Consistency: Excess Return Rank Volatility (8 Years of Performance History) is 13.8, which is similar or below the peer group median of 18.7

Style Consistency – Market Capitalization: Product's median market capitalization is between the 5th and 95th percentile within the peer group

Style Consistency – Value: Changes of the product's dividend yield and Price/Book rankings within the peer group were not significant over the past 1 year

Risk Management InForm Barometer


(Threshold for )

Maximum Drawdown 13.1% (13.6%)

Capture Ratio 1.1 (1.0)

Performance Analysis InForm Barometer


(Threshold for ) Excess Return 2.1% (0.1%)

Risk Adjusted Return 0.6 (0.0)

Consistency of Outperformance vs Benchmark 78.3% (58.5%)

Consistency of Outperformance vs Peers 65.0% (58.5%)

Source: eVestment

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Rolling 3-Year Excess Return (p.a.) Over Russell 1000 Value

Historical Consistency

3.7%

1.3%

2.1%

0.0%

1.0%

2.0%

3.0%

4.0%

3 Years 5 Years 7 Years

Excess Return (p.a.) Over Russell 1000 Value

Historical Excess Return

0.9

0.3

0.6

0.0

0.4

0.8

1.2

3 Years 5 Years 7 Years

Information Ratio (p.a.) Against Russell 1000 Value

Historical Risk-Adjusted Return


Aon InForm Assessment to 31 Mar 2019 (Continued)

Terms & Conditions InForm Barometer ( | & | represents prior quarter)

Current Value (Threshold for )

Management Fee 0.50% (0.55%)* *Fee and assessment reflect segregated account sliding schedule at $50 million.

Operations*

Is the firm affiliated with a Broker/Dealer? No

GIPS (Global Investment Performance Standards) Compliant? Yes

Errors & Omissions Insurance? Yes

Fiduciary Liability Insurance? Yes Note: The Aon InForm Assessment is based on data as of 31 March 2019 (obtained on 2 May 2019 from eVestment) unless stated differently. Product data completion is 100.0% and peer group average data completion is 83.4%. Changes in manager or peer group data completion may impact the Aon InForm Assessment. *The output to the questions above (Operations section) is self-reported by the manager and obtained through eVestment and is provided for informational purposes only. Past performance is no guarantee of future results.


Glossary – Equity Manager Model Description The below table provides a more detailed description of the factors used in the above Aon InForm Assessment. Consultants will be pleased to answer questions should you require further information in relation to this report.

Business Factor Description Employee Ownership Percentage of firm ownership held by staff

Last Change of Ownership Date of most recent ownership change

Institutional Client Base (Product)

Percentage of assets under management (“AUM”) held by institutional investors (pension funds, sovereign wealth funds, insurance companies, endowments, foundations etc.) at the product level

Firm and Product Net Asset Flow

Net asset flow over the last three years at the firm and product level. Product level factor incorporates an assessment relating to the strategy’s capacity.

Firm and Product Gross Asset Outflow

Average gross asset outflow over the last three years at the firm and product level

Product and Asset Class Importance to Firm

The asset class and product AUM in relation to the firm level AUM

Investment Staff Factor Description Team Size The manager’s investment related resources across various functions

Staff Turnover Percentage of investment staff turnover (average over the last three years)

Experience Number of years’ worth of investment experience across various functions

Investment Process Factor Description Active Risk / Tracking Error Illustrates the product’s tracking error i.e. how closely a manager follows its

benchmark

Investment Process Consistency

Volatility of the product’s performance relative to its peer group

Style Consistency Displays the Market Capitalization and Price-to-Book of the product’s underlying holdings and assesses if this is in line with its peers

Cash Allocation Highest cash allocation over the past 3 years as a percentage of the portfolio

Risk Management Factor Description

Maximum Drawdown Measures the distance between the peak and trough of the product’s performance

Capture Ratio Measures the differential between the product’s gains when its benchmark is up vs the product’s losses when its benchmark is down


Performance Analysis Factor Description Excess Return Compares the excess return of the product against the manager’s benchmark

(longest available of 1, 2, 3, 5 or 7-years)

Risk Adjusted Return Displays the Sharpe Ratio or Information Ratio (depending on the product’s tracking error). These measures are different ways of assessing the product’s return after adjusting for the level of risk taken.

Consistency of Outperformance

Looks at long term consistency of excess return in relation to the product’s benchmark and peers

Terms & Conditions Factor Description Management Fee Management fee level relative to the product’s peer group

Operations Factor Description Operations Factors These factors look across a number of non-investment related areas such as

operational infrastructure, compliance and industry best practice


Ratings Explanation Below we describe the criteria which we use to rate fund management organizations and their specific investment products. Our manager research process assesses each component using both our qualitative and Aon InForm criteria. With the exception of Operational Due Diligence ("ODD"), each component is assessed as follows:

Qualitative Outcome

Aon InForm Outcome

1 = Weak

2 = Average

3 = Above Average

4 = Strong

Pass: This component in isolation meets or exceed our desired criteria

Alert: This component in isolation does not meet our desired criteria, or the lack of data on this component means that we are not able to judge whether it meets our desired criteria

- Not assessed: There is a lack of data, which means that we are not able to assess this component, however we do not consider this in isolation to justify an Alert

Aon InForm Barometer Outcome

Factor in isolation meets or exceed our desired criteria. The further the blue bar is to the right, the more favourable the outcome.

Factor in isolation does not meet our desired criteria. The further the red bar is to the left, the less favourable the outcome.

| & | Represents prior quarter outcome

- There is a lack of data, which means that we are not able to assess this factor, however we do not consider this in isolation to justify an Alert

The ODD factor is assigned a rating and can be interpreted as follows: Overall ODD Rating What does this mean?

A1 Pass No material operational concerns – the firm’s operations largely align with a well-controlled operating environment.

A2 Pass The firm’s operations largely align with a well-controlled operating environment, with

limited exceptions – managers may be rated within this category due to resource limitations or where isolated areas do not align with best practice.

Conditional Pass (“CP”)

Specific operational concerns noted that the firm has agreed to address in a reasonable timeframe; upon resolution, we will review the firm’s rating.

F Material operational concerns that introduce the potential for economic or reputational exposure exist – we recommend investors do not invest and/or divest current holdings.

Aon previously assigned ODD ratings of pass, conditional pass, or fail for the ODD factor. We are in the process of refreshing all ODD ratings to the new terminology. During the transition period, the prior ratings, as follows, may persist in some deliverables until the ODD factor rating is converted to the above noted letter ratings.

Pass – Our research indicates that the manager has acceptable operational controls and procedures in place.


Conditional Pass – We have specific concerns that the manager needs to address within a reasonable established timeframe.

Fail – Our research indicates that the manager has critical operational weaknesses and we recommend that clients formally review the appointment.

An overall rating is then derived taking into account both the above outcomes for the product. The overall rating can be interpreted as follows:

Overall Rating What does this mean?

Buy We recommend clients invest with or maintain their existing allocation to our Buy rated high conviction products

Buy (Closed) We recommend clients invest with or maintain their existing allocation to our Buy rated high conviction products, however it is closed to new investors

Qualified A number of criteria have been met and we consider the investment manager to be qualified to manage client assets

Sell We recommend termination of client investments in this product

In Review

The rating is under review as we evaluate factors that may cause us to change the current rating

The comments and assertions reflect our views of the specific investment product and our opinion of its quality. Differences between the qualitative and Aon InForm outcome can occur and if meaningful these will be explained within the Key Monitoring Points section. Although the Aon InForm Assessment forms a valuable part of our manager research process, it does not automatically alter the overall rating where we already have a qualitative assessment. Overall rating changes must go through our qualitative manager vetting process. Similarly, we will not issue a Buy recommendation before fully vetting the manager on a qualitative basis.

As of December 31, 2018 Aon had 23,490 strategies in its database across asset classes. Aon assigned a quantitative rating of “Qualified” to 21% of strategies and a “Sell” to 11% of strategies in the database. A “Buy” rating cannot be assigned via quantitative analysis. Across asset classes, Aon assigned a qualitative rating of “Buy” to 6% of strategies in the database; “Qualified” to 3% of strategies in the database; “Sell” to 1% of strategies in the database; and “In Review” to 0.4% of strategies in the database. Excludes Townsend databases and ratings.

AHIC does not receive compensation from investment managers for strategy ratings. On occasion, a research analyst may have an economic interest in the security or product being rated. AHIC maintains policies and procedures regarding personal securities transactions in its Code of Ethics. A copy of the Code of Ethics, and a statement regarding whether the research analyst rating this security has any financial interest in the security, is available upon written request to AHIC Compliance, 200 E. Randolph Street, 15th Floor, Chicago, IL 60601.


The ESG factor is assigned a rating and can be interpreted as follows: Overall ESG Rating What does this mean?

4 The Fund Management Team demonstrates high awareness of all known and potentially financially material ESG risks in the investment strategy and, at present, has incorporated appropriate processes to identify, evaluate and potentially mitigate these risks across the entire portfolio.

3 The Fund Management Team demonstrates an above average awareness of potential ESG risks in the investment strategy and has taken essential steps to identify, evaluate and potentially mitigate these risks.

2 The Fund Management Team is aware of potential ESG risks in the investment strategy and has taken some steps to identify, evaluate and potentially mitigate these risks.

1 The Fund Management Team appears unaware or unconcerned with ESG risks in the investment strategy and has not taken any material steps to address ESG considerations in the portfolio.

N/A (Not Applicable) An evaluation of ESG risks is not directly applicable to this strategy and therefore an ESG rating has not been assessed.

NR (Not Rated) An evaluation of ESG risks is not yet available for this strategy.


Disclaimer This document has been produced by Aon’s Investment Manager 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 Securities 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

Aon Hewitt Investment Consulting, Inc. 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 © 2019 Aon plc

Appendix

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· 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 69

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

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Presentation Materials · 2019-12-18 · 14.8% Medium Value 11.1% Medium Growth 3.3% Small Value...

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Transcript of Presentation Materials · 2019-12-18 · 14.8% Medium Value 11.1% Medium Growth 3.3% Small Value...