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Fairfax County Public Schools | Third Quarter 2015

Presentation Materials

Contact Information

James P. Scott Partner

Aon Hewitt Investment Consulting, Inc.

7325 Beaufont Springs Drive | Suite 300

Richmond, VA 23225

t +1 (804) 560-2261

f +1 (804) 320-3711

[email protected]

Gregory J. Fox Senior Consultant


45 Glover Avenue

Norwalk, CT 06850

t +1 (203) 523-8780

f +1 (847) 953-2192

[email protected]

Matthew C. Stone Senior Investment Analyst


45 Glover Avenue

Norwalk, CT 06850

t +1 (203) 523-8929

f +1 (203) 523-6750

[email protected]

mailto:[email protected]



I Third Quarter 2015 Market Environment Page 1

II FCPS Plan Summary Page 11

III Participant Information Page 24

IV Investment Manager Analysis Page 29

V Fee Analysis Page 49

VI Manager Research Page 50

VII Appendix Page 60

Table Of Contents

Global Equity Markets

Global equity markets returned -9.59% during the third quarter of 2015. The negative performance was driven by

inaction of the U.S. Federal Reserve to raise rates, and China’s economic slowdown.

Equity markets across the globe posted negative returns, not one major market was up in U.S.$ terms.

Emerging markets were the worst performers in the third quarter due to their sensitivity to China and Federal Reserve

policy decisions.

Page 1

Global Equity Markets

The two exhibits on this slide illustrate the percentage that each country/region represents of the global equity market

as measured by the MSCI All Country World IMI Index and the MSCI All Country World ex-U.S. IMI Index.

Page 2

U.S. Equity Markets

The Russell 3000 Index returned -7.25% during the quarter and returned -0.50% over the one-year period.

During the third quarter, the utilities sector was the strongest performer, posting a return of 4.20%. The energy and

materials sectors were the weakest performers, producing returns of -18.99% and -17.26%, respectively.

Performance across the market capitalization spectrum was mixed over the quarter. Large cap stocks outperformed

the smaller segments of the markets, and growth outperformed value across the larger capitalizations.

Page 3

U.S. Fixed Income Markets

The Barclays Aggregate Bond Index returned 1.23% in the third quarter. Government bonds were the strongest performing index segment, returning 1.71%.

High yield bonds underperformed investment grade corporate bonds.

Longer duration bonds outperformed shorter duration bonds.

Page 4

U.S. Fixed Income Markets

The Treasury yield curve flattened during the third quarter, driven by long bond yields falling.

The 10-year U.S. Treasury yield ended the quarter at 2.06%, 29 basis points lower than its level at the beginning of the

quarter.

The 10-year TIPS yield rose by 17 basis points over the quarter and ended the period at 0.65%.

Page 5

European Fixed Income Markets

In the Eurozone, bond spreads tightened during the third quarter of 2015 as peripheral tensions eased with Greece. As

the possibility of a Greece exit from the Euro wanes, the yield spread tightened 6.7% during the third quarter.

Page 6

Credit Spreads

During the third quarter, credit spreads widened across all areas of the bond market.

High yield spreads (+154 basis points) rose by the most over the quarter, followed by global emerging markets spreads (+90 basis points).

Spread (bps) 9/30/2015 6/30/2015 9/30/2014 Quarterly Change (bps) 1-Year Change (bps)

U.S. Aggregate 59 51 43 8 16

Long Gov't 4 4 4 0 0

Long Credit 230 202 164 28 66

Long Gov't/Credit 143 128 106 15 37

MBS 31 26 30 5 1

CMBS 108 101 99 7 9

ABS 69 62 56 7 13

Corporate 169 145 112 24 57

High Yield 630 476 424 154 206

Global Emerging Markets 418 328 288 90 130

Source: Barclays Live

Page 7

Commodities

The Bloomberg Commodity Index fell during the third quarter with a return of -14.47%.

Over the quarter, the best performing segment of the market was livestock, returning -5.38%.

Energy was the worst performing sector of the market during the quarter with a return of -22.34%.

Page 8

Currency

As measured through the broad trade weighted U.S. dollar index, the U.S. dollar strengthened during the quarter.

The dollar depreciated against the Euro and Yen, but appreciated against the British Pound Sterling.

Page 9

U.S. Commercial Real Estate Markets

U.S. private equity real estate returns remain well above long-term averages, bolstered by overall economic strength and continued improvement in property

fundamentals. For Core investments, the NFI-ODCE returned 3.7%* (gross of fees) this quarter, roughly in-line with the second quarter return of 3.8%. On a

one-year basis, the NFI-ODCE has actually shown improvement; now at 14.9%, up 250 bps from a year ago.

Non-Core investments are now past their cyclical sweet spot, but for new dollars entering the market attractive risk return profiles remain though expected

returns have declined. Manager and strategy selection is crucial to help reduce risk at this mature stage in the cycle.

Given several years of robust investment returns, select U.S. markets have reestablished new peak pricing driven by investor demand for well located, high

quality assets. Accommodating capital markets, strong rental rate growth and robust capital flows help to support today’s pricing. In addition, foreign investors

continue to view U.S. real estate as particularly attractive due to the anticipated continued strength of the U.S. dollar.

Interest rate speculation continues to be the main question on investors’ minds. It is currently predicted that The Federal Reserve will raise rates by the end of

the year, but strong fundamentals within real estate should help offset rising rates. Portfolio structure and other long term risk mitigation measures are

necessary during these times of volatility within capital markets.

In the public real estate marketplace for the 3rd quarter, the U.S. and global real estate securities posted returns of 2.0% and -1.4%, respectively; and both

remain in negative territory (slightly over 4%) year to date. The U.S. REIT market, which experienced a correction in August, recovered as the Fed delayed its

interest rate decision. The impact of the Chinese currency devaluation and market crash reverberated throughout Asia, where property markets

underperformed across the board (the region was down 12.4%). Europe was a bright spot this quarter (up 3.5%), as the market welcomed the re-election of the

Greek Prime Minister, relieving the immediate threat of the Greek exit from the Eurozone.

*Indicates preliminary NFI-ODCE data

NOI GROWTH

SOURCE:NCREIF, AON HEWITT 6/30/2015

Robust

growth

expected to

continue

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 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, 2015, 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 small cap growth. Participants may allocate their investments among the funds in accordance with their own personal

tolerance for risk. As of September 30, 2015, the assets of the Plan totaled $157.9 million. The Plan held 16.6% of assets in the

guaranteed interest product, 11.8% in fixed income, 54.2% in domestic equity, 10.6% in foreign equity and 5.9% in target date

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

Plan Performance

During the third quarter of 2015, global equity markets declined drastically in value, driven by inaction of the U.S. Federal

Reserve to raise rates, and China’s economic slowdown. Domestically, the Russell 3000 Index returned -7.25% during the

quarter. Sector results were mostly negative across the board during the period. The only outperforming sector was utilities.

Overall, performance across the market capitalization spectrum was mixed over the quarter. Large cap stocks outperformed

the smaller segments of the markets, and growth outperformed value across the larger capitalizations. The developed non-U.S.

equity markets generally underperformed domestic equity markets this quarter, with the MSCI EAFE Index generating a return of

-10.23%. Emerging markets performed even worse; the MSCI Emerging Markets Index returned -17.9%. The domestic fixed

income market, as represented by the Barclays Aggregate Bond Index, posted a return of 1.23% for the quarter. Government

bonds were the strongest performing index segment, returning 1.71%. Long duration bonds outperformed their shorter duration

counterparts, as the yield curve flattened. Overall, the domestic fixed income market was fairly in line with the global and non-

U.S. markets, as measured by the Barclays Global Aggregate Index and the Citigroup Non-U.S. WGBI.

Page 11


Plan Performance (continued)

Against this backdrop, the Plan’s options had mixed results on a relative basis. Performance for the Plan’s passive strategies closely

tracked their target benchmarks.

Longer-term relative performance of most of the Plan’s active investments remains reasonable for the ten-year period ending

September 30, 2015, as the fund’s offerings perform well relative to the benchmarks and peer group. PIMCO IRMA has a shorter track

record but has significantly outperformed its custom benchmark since inception in 2011. Allowing for the expense ratios of the funds,

both of the Plan’s index options successfully tracked their target Indices for the quarter as well as for longer periods.

Quarterly Fund Attribution

PIMCO Total Return Fund underperformed during the quarter

- U.S. interest rate strategies, particularly duration, yield curve positioning, and instrument selection

- TIPS help in lieu of nominal Treasuries

- Local interest rate exposure in Mexico and Brazil

+ Long dollar positions against emerging markets currencies

PIMCO Inflation Response Multi-Asset Fund outperformed its benchmark during the quarter

+ Exposure to Italian ILBs, as peripheral spreads rallied in July after Greece agreed to austerity measures with its creditors

+ Active commodity views, including curve and relative value positions in petroleum and agriculture

- Exposure to long-dated U.S. breakeven inflation, as inflation expectations came down

- Tactical exposure to Brazilian nominal duration, amid headwinds from their rating downgrade and yields moved sharply higher

Page 12


Quarterly Fund Attribution (continued)

Dodge & Cox Stock Fund underperformed during the quarter

- Overweight position to Financials sector

- Overweight position to the Consumer Discretionary sector

- Poor stock selection in the Energy sector

Baron Growth Fund outperformed during the quarter

+ Positive stock selection (Under Armour, Arch Capital Group, and SS&C Techologies Holdings, Inc.)

- Industrials, Health Care, and Financials were the top detracting sectors

Artisan International Fund underperformed during the quarter

- Heavy exposure to consumer discretionary, in particular autos

- Poor stock selection (Baidu, Grupo Televisa, Liberty Global, and Porsche Automobil)

+ Limited exposure to commodities

Page 13

Market ValueAs of

07/01/2015

NetTransfers

Contributions DistributionsCapital

Apprec./Deprec.

Market ValueAs of

09/30/2015

U.S. FIXED INCOME

Great West Portfolio Fund 26,380.93 -180.06 399.06 -607.07 129.61 26,122.47

PIMCO Total Return Adm 19,341.15 -86.12 247.45 -840.58 -23.36 18,638.55

PIMCO Inflation Response MultiAsst Inst 85.98 0.56 2.61 -0.01 -5.44 83.70

TARGET DATE

T. Rowe Price Retirement Balanced 428.07 - 5.37 - -16.25 417.19

T. Rowe Price Retirement 2005 14.72 10.79 0.54 - -1.00 25.04


T. Rowe Price Retirement 2015 1,345.83 40.78 26.96 - -71.10 1,342.47

T. Rowe Price Retirement 2020 2,393.21 23.55 62.50 -18.75 -141.23 2,319.28

T. Rowe Price Retirement 2025 1,598.37 315.75 52.60 -79.80 -106.44 1,780.49

T. Rowe Price Retirement 2030 752.74 -45.37 44.51 - -50.63 701.25

T. Rowe Price Retirement 2035 1,296.52 0.53 51.35 - -100.34 1,248.06


T. Rowe Price Retirement 2045 228.43 5.82 15.67 -0.02 -19.23 230.67



U.S. EQUITY

BlackRock S&P 500 Stock 20,298.33 130.55 335.25 -345.35 -1,309.75 19,109.04

Dodge & Cox Stock 22,264.34 95.51 218.84 -638.76 -2,165.91 19,774.02

Columbia Mid Cap Index Z 25,890.84 -98.75 294.98 -466.19 -2,182.58 23,438.31

Baron Growth Inst 25,697.92 -180.47 278.54 -347.56 -2,197.39 23,251.04

INTERNATIONAL EQUITY

Artisan International Inv 19,516.65 -61.39 310.01 -433.77 -2,557.68 16,773.82

OTHER

Loan Fund 1,372.98 - 143.11 -101.54 5.83 1,420.39

Total 457(b) Plan 170,101.36 - 2,561.52 -3,888.20 -10,901.48 157,873.20

Fairfax County Public Schools

Financial Reconciliation

($000)

1 Quarter Ending September 30, 2015

Page 14

June 30, 2015 : $170,101,360 September 30, 2015 : $157,873,195

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 94,151,431.98 55.35¢£

International Equity 19,516,649.27 11.47¢£

Domestic Fixed Income 19,341,154.38 11.37¢£

GIC 26,380,931.13 15.51¢£

Real Return 85,980.59 0.05¢£

Loan Fund 1,372,980.69 0.81¢£

Life Cycle 9,252,231.78 5.44¢£

SegmentsMarket Value

($)Allocation

(%)

Domestic Equity 85,572,406.91 54.20¢£

International Equity 16,773,815.14 10.62¢£

Domestic Fixed Income 18,638,547.43 11.81¢£

GIC 26,122,469.93 16.55¢£

Real Return 83,704.55 0.05¢£

Loan Fund 1,420,388.80 0.90¢£

Life Cycle 9,261,862.66 5.87¢£


457(b) Plan

Asset Allocation by Segment

Page 15

Domestic Equity International Equity Domestic Fixed Income GIC

Real Return Loan Fund 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


Historical Asset Allocation by Segment

April 1, 2010 To September 30, 2015

Total 457(b) Plan

Page 16

Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

Total 457(b) Plan 157,873.20 100.00

U.S. Fixed Income 44,844.72 28.41

Great West Portfolio Fund 26,122.47 16.55 0.50 1.50 1.86 1.76 2.03 2.35 2.58

50% BC Int. Agg/50% 90 day T-Bill 0.55 0.88 1.49 0.85 1.37 2.22 2.84

90 Day U.S. Treasury Bill 0.02 0.03 0.03 0.05 0.07 0.12 1.31

PIMCO Total Return Adm 18,638.55 11.81 -0.15 (90) 0.07 (84) 1.32 (84) 1.11 (89) 2.98 (64) 6.09 (20) 5.50 (5)

Barclays Aggregate Index 1.23 (10) 1.13 (28) 2.94 (15) 1.71 (51) 3.10 (57) 4.85 (70) 4.64 (46)

PIMCO Inflation Response MultiAsst Inst 83.70 0.05 -6.24 (59) -5.72 (60) -7.43 (79) -4.78 (99) - - -

PIMCO IRMA Benchmark -7.07 (70) -5.88 (63) -8.86 (84) -6.88 (99) -1.38 (98) 0.74 (100) 1.88 (99)

Target Date 9,261.86 5.87

TRP Retirement Balanced 417.19 0.26 -3.79 (70) -2.37 (59) -1.82 (64) 3.86 (45) 5.19 (37) 5.92 (43) 4.87 (32)

TRP Retirement Income Index -3.36 (61) -1.97 (40) -0.94 (48) 4.15 (33) 5.17 (38) 5.08 (64) 4.39 (52)

TRP Retirement 2005 25.04 0.02 -3.79 (71) -2.46 (65) -1.67 (61) 4.33 (27) 5.82 (19) 6.43 (29) 5.19 (23)

TRP Retirement 2005 Index -3.13 (53) -1.88 (38) -0.41 (32) 4.72 (22) 5.87 (17) 5.79 (46) 4.86 (35)

TRP Retirement 2010 333.17 0.21 -4.22 (76) -2.71 (70) -1.77 (77) 5.04 (15) 6.46 (17) 6.83 (3) 5.34 (1)


TRP Retirement 2015 1,342.47 0.85 -5.01 (78) -3.11 (65) -1.88 (68) 6.11 (7) 7.35 (2) 7.43 (1) 5.66 (-)

TRP Retirement 2015 Index -4.48 (56) -2.91 (61) -1.10 (44) 6.31 (3) 7.40 (1) 6.77 (18) 5.29 (-)

TRP Retirement 2020 2,319.28 1.47 -5.84 (83) -3.43 (65) -2.03 (66) 7.01 (3) 8.10 (2) 7.88 (1) 5.84 (1)


TRP Retirement 2025 1,780.49 1.13 -6.55 (84) -3.76 (58) -2.20 (61) 7.86 (3) 8.71 (4) 8.22 (1) 6.01 (-)


TRP Retirement 2030 701.25 0.44 -7.15 (71) -4.04 (44) -2.34 (48) 8.54 (5) 9.26 (3) 8.53 (1) 6.17 (1)



Asset Allocation & Performance

As of September 30, 2015

Page 17


Asset Allocation & Performance


Allocation

MarketValue($000)

%

Performance(%)

1Quarter

YearTo

Date

1Year

3Years

5Years

7Years

10Years

TRP Retirement 2035 1,248.06 0.79 -7.70 (65) -4.26 (26) -2.46 (38) 9.02 (3) 9.62 (3) 8.71 (2) 6.21 (-)


TRP Retirement 2040 364.55 0.23 -8.13 (68) -4.52 (33) -2.65 (35) 9.29 (7) 9.77 (5) 8.83 (1) 6.30 (-)


TRP Retirement 2045 230.67 0.15 -8.12 (57) -4.50 (19) -2.63 (26) 9.31 (6) 9.78 (1) 8.83 (1) 6.31 (-)


TRP Retirement 2050 249.53 0.16 -8.11 (58) -4.55 (20) -2.66 (29) 9.29 (6) 9.77 (5) 8.82 (1) -

TRP Retirement 2050 Index -7.75 (36) -5.51 (58) -3.23 (48) 8.81 (15) 9.58 (8) 7.94 (9) -

TRP Retirement 2055 250.18 0.16 -8.10 (53) -4.51 (18) -2.60 (24) 9.28 (7) 9.79 (1) 8.81 (-) -

TRP Retirement 2055 Index -7.75 (27) -5.51 (60) -3.23 (52) 8.81 (15) 9.58 (4) 7.94 (-) -

U.S. Equity 85,572.41 54.20

BlackRock S&P 500 Stock 19,109.04 12.10 -6.46 (44) -5.30 (16) -0.64 (11) 12.31 (17) 13.22 (21) 9.68 (13) 6.70 (22)

S&P 500 Index -6.44 (14) -5.29 (8) -0.61 (6) 12.40 (1) 13.34 (1) 9.75 (3) 6.80 (4)

Dodge & Cox Stock 19,774.02 12.53 -9.84 (94) -8.64 (90) -6.62 (96) 13.39 (9) 13.03 (30) 9.56 (30) 5.53 (76)

S&P 500 Index -6.44 (33) -5.29 (35) -0.61 (29) 12.40 (33) 13.34 (22) 9.75 (25) 6.80 (29)

Columbia Mid Cap Index Z 23,438.31 14.85 -8.53 (48) -4.77 (35) 1.21 (28) 12.89 (46) 12.72 (28) 10.96 (29) 8.12 (7)

S&P MidCap 400 -8.50 (46) -4.66 (34) 1.40 (28) 13.12 (38) 12.93 (25) 11.15 (23) 8.25 (6)

Baron Growth Inst 23,251.04 14.73 -8.66 (24) -5.38 (59) 1.51 (69) 11.94 (54) 13.46 (45) - -

Baron Growth Rtl -8.71 (24) -5.56 (59) 1.27 (72) 11.65 (60) 13.17 (48) 10.23 (48) 7.54 (11)

Russell 2000 Growth Index -13.06 (72) -5.47 (59) 4.04 (52) 12.85 (43) 13.26 (46) 10.44 (44) 7.67 (10)

International Equity 16,773.82 10.62

Artisan International Inv 16,773.82 10.62 -13.25 (90) -9.98 (92) -9.55 (65) 5.64 (26) 6.66 (1) 5.93 (5) 4.92 (15)

MSCI EAFE Index (Net) -10.23 (46) -5.28 (55) -8.66 (54) 5.63 (26) 3.98 (35) 3.77 (36) 2.97 (68)

MSCI AC World ex USA Index (Net) -12.17 (77) -8.63 (89) -12.16 (87) 2.34 (90) 1.82 (91) 3.20 (62) 3.03 (60)

Page 18

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

U.S. Fixed Income

Great West Portfolio Fund 2.58 2.88 3.26 3.42 3.37 2.67 2.55 2.11 1.53 1.86

50% BC Int. Agg/50% 90 day T-Bill 2.45 4.67 5.97 3.50 3.28 3.11 2.99 1.80 -0.48 2.06

90 Day U.S. Treasury Bill 2.88 4.76 4.91 2.10 0.17 0.13 0.08 0.08 0.05 0.04

PIMCO Total Return Adm 2.63 (11) 3.74 (85) 8.82 (1) 4.56 (22) 13.53 (33) 8.57 (17) 3.91 (94) 10.10 (4) -2.16 (75) 4.43 (80)

Barclays Aggregate Index 2.43 (28) 4.34 (41) 6.97 (19) 5.24 (19) 5.93 (84) 6.54 (69) 7.84 (16) 4.21 (79) -2.02 (67) 5.97 (35)

IM U.S. Broad Market Core Fixed Income (MF) Median 2.19 4.24 6.16 0.05 10.86 7.24 6.98 6.17 -1.47 5.76

PIMCO Inflation Response MultiAsst Inst - - - - - - - 9.56 (65) -9.29 (100) 1.57 (72)

PIMCO IRMA Benchmark 9.87 (18) 5.27 (97) 10.35 (33) -14.42 (13) 17.32 (90) 13.49 (46) 3.82 (14) 4.83 (91) -11.77 (100) -0.46 (82)

IM Flexible Portfolio (MF) Median 6.95 12.11 7.73 -28.88 25.61 13.14 -1.72 10.99 12.01 3.76

Target Date

TRP Retirement Balanced 4.86 (9) 9.98 (19) 6.10 (36) -18.38 (62) 22.06 (27) 10.11 (41) 1.43 (67) 10.06 (33) 9.16 (29) 3.92 (63)

TRP Retirement Income Index 4.69 (10) 9.62 (24) 6.29 (34) -15.44 (45) 14.13 (79) 8.70 (69) 1.76 (57) 8.81 (55) 9.23 (28) 4.49 (47)

IM Mixed-Asset Target Alloc Consv (MF) Median 3.89 8.01 5.69 -16.60 18.78 9.80 2.10 9.04 7.51 4.22

TRP Retirement 2005 5.57 (5) 11.50 (7) 6.67 (25) -22.24 (83) 24.55 (17) 11.51 (17) 1.43 (66) 11.35 (15) 9.74 (21) 4.72 (41)

TRP Retirement 2005 Index 5.30 (7) 11.29 (10) 6.79 (24) -19.10 (69) 16.91 (63) 10.22 (41) 2.38 (44) 9.52 (42) 9.86 (21) 5.48 (26)

IM Mixed-Asset Target Alloc Consv (MF) Median 3.89 8.01 5.69 -16.60 18.78 9.80 2.10 9.04 7.51 4.22

TRP Retirement 2010 6.25 (-) 12.84 (10) 6.65 (48) -26.71 (80) 27.95 (4) 12.70 (4) 0.54 (55) 12.44 (6) 11.93 (8) 4.99 (23)

TRP Retirement 2010 Index 5.78 (-) 12.52 (25) 6.82 (46) -23.19 (34) 19.64 (67) 11.42 (30) 1.81 (25) 10.61 (26) 12.00 (7) 5.77 (12)

IM Mixed-Asset Target 2010 (MF) Median - 12.02 6.42 -24.07 22.97 10.88 0.90 9.64 9.24 4.49

TRP Retirement 2015 6.69 (-) 13.73 (-) 6.75 (-) -30.22 (80) 31.35 (1) 13.79 (4) -0.32 (78) 13.81 (1) 15.18 (2) 5.37 (30)

TRP Retirement 2015 Index 6.07 (-) 13.44 (-) 6.85 (-) -26.61 (30) 22.08 (68) 12.57 (26) 1.09 (40) 11.94 (24) 14.97 (3) 6.30 (15)

IM Mixed-Asset Target 2015 (MF) Median - - - -28.21 24.82 11.67 0.84 11.10 11.54 4.85

TRP Retirement 2020 7.17 (-) 14.66 (8) 6.73 (46) -33.48 (83) 34.19 (1) 14.74 (3) -1.20 (81) 15.01 (1) 18.05 (2) 5.63 (37)

TRP Retirement 2020 Index 6.32 (-) 14.37 (10) 6.84 (45) -29.72 (58) 24.20 (60) 13.47 (22) 0.48 (44) 13.04 (20) 17.56 (3) 6.70 (5)

IM Mixed-Asset Target 2020 (MF) Median - 12.77 6.25 -28.89 24.89 12.70 0.03 11.79 13.00 5.12

TRP Retirement 2025 7.42 (-) 15.44 (-) 6.81 (-) -35.90 (87) 36.29 (1) 15.37 (1) -2.06 (71) 16.00 (1) 20.78 (3) 5.84 (38)

TRP Retirement 2025 Index 6.67 (-) 15.21 (-) 6.84 (-) -32.24 (36) 26.15 (66) 14.12 (26) -0.22 (25) 14.00 (22) 20.01 (4) 7.06 (9)

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

TRP Retirement 2030 8.12 (-) 16.14 (12) 6.83 (51) -37.79 (75) 37.99 (1) 16.01 (3) -2.70 (67) 16.82 (1) 23.09 (4) 6.05 (35)

TRP Retirement 2030 Index 7.12 (-) 16.12 (12) 6.80 (51) -34.16 (42) 27.43 (71) 14.72 (30) -0.79 (20) 14.85 (20) 22.13 (8) 7.29 (7)

IM Mixed-Asset Target 2030 (MF) Median - 14.22 6.87 -36.25 28.88 13.88 -2.21 13.92 18.21 5.66

TRP Retirement 2035 8.05 (-) 16.18 (-) 6.81 (-) -38.88 (71) 39.04 (1) 16.34 (1) -3.26 (61) 17.35 (1) 24.86 (3) 6.07 (38)

TRP Retirement 2035 Index 7.15 (-) 16.24 (-) 6.74 (-) -35.35 (28) 28.59 (70) 15.10 (42) -1.37 (10) 15.45 (39) 23.76 (12) 7.37 (5)


TRP Retirement 2040 8.14 (-) 16.24 (-) 6.77 (63) -38.85 (72) 39.07 (1) 16.51 (9) -3.49 (43) 17.55 (1) 25.93 (8) 6.18 (38)

TRP Retirement 2040 Index 7.15 (-) 16.36 (-) 6.74 (64) -35.35 (14) 28.59 (84) 15.17 (38) -1.46 (9) 15.66 (40) 24.73 (20) 7.43 (7)

IM Mixed-Asset Target 2040 (MF) Median - - 7.33 -37.62 30.66 14.70 -3.71 15.19 21.74 5.85

TRP Retirement 2045 - 16.15 (-) 6.84 (-) -38.83 (53) 39.10 (1) 16.44 (10) -3.47 (31) 17.62 (1) 25.93 (5) 6.14 (35)

TRP Retirement 2045 Index - 16.24 (-) 6.74 (-) -35.35 (18) 28.59 (91) 15.17 (44) -1.46 (1) 15.66 (53) 24.73 (22) 7.43 (7)



Calendar Year Performance


Returns for periods greater than one year are annualized.Returns are expressed as percentages.

Page 19


Calendar Year Performance


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

TRP Retirement 2050 - - 6.82 (-) -38.80 (58) 38.92 (1) 16.41 (15) -3.36 (26) 17.55 (4) 25.90 (12) 6.19 (36)

TRP Retirement 2050 Index - - 6.74 (-) -35.35 (6) 28.59 (85) 15.17 (39) -1.46 (5) 15.66 (40) 24.73 (28) 7.43 (8)


TRP Retirement 2055 - - 6.82 (-) -38.89 (-) 38.97 (-) 16.41 (-) -3.35 (16) 17.60 (1) 25.86 (12) 6.18 (40)

TRP Retirement 2055 Index - - 6.74 (-) -35.35 (-) 28.59 (-) 15.17 (-) -1.46 (1) 15.66 (60) 24.73 (29) 7.43 (10)

IM Mixed-Asset Target 2055+ (MF) Median - - - - - - -4.33 15.73 23.18 5.72

U.S. Equity

BlackRock S&P 500 Stock 4.71 (52) 15.60 (46) 5.36 (36) -37.01 (30) 26.49 (18) 14.92 (36) 1.98 (41) 15.84 (33) 32.21 (28) 13.61 (14)

S&P 500 Index 4.91 (4) 15.79 (1) 5.49 (11) -37.00 (29) 26.46 (23) 15.06 (1) 2.11 (8) 16.00 (3) 32.39 (3) 13.69 (1)

IM S&P 500 Index (MF) Median 4.71 15.56 5.28 -37.06 26.39 14.82 1.96 15.77 32.11 13.47

Dodge & Cox Stock 9.37 (15) 18.53 (6) 0.14 (92) -43.31 (91) 31.27 (25) 13.49 (54) -4.08 (88) 22.01 (3) 40.55 (1) 10.40 (71)

S&P 500 Index 4.91 (59) 15.79 (30) 5.49 (60) -37.00 (55) 26.46 (55) 15.06 (33) 2.11 (30) 16.00 (43) 32.39 (46) 13.69 (21)

IM U.S. Large Cap Core Equity (MF) 5.71 14.51 6.20 -36.60 27.05 13.83 1.00 15.46 32.17 11.93

Columbia Mid Cap Index Z 12.45 (36) 10.25 (78) 7.95 (40) -36.11 (39) 37.06 (33) 26.44 (14) -1.89 (40) 17.56 (29) 33.28 (66) 9.52 (52)

S&P MidCap 400 12.55 (34) 10.32 (78) 7.98 (39) -36.23 (40) 37.38 (32) 26.64 (14) -1.73 (39) 17.88 (23) 33.50 (61) 9.77 (49)

IM U.S. Mid Cap Core Equity (MF) Median 11.08 14.34 6.72 -37.86 33.34 23.43 -3.25 15.56 34.48 9.57

Baron Growth Inst - - - - - 24.32 (81) 1.51 (29) 16.74 (15) 38.69 (75) 4.66 (18)

Baron Growth Rtl 5.71 (71) 15.50 (17) 6.59 (57) -39.18 (27) 34.24 (49) 24.01 (82) 1.24 (29) 16.43 (16) 38.32 (77) 4.40 (19)

Russell 2000 Growth Index 4.15 (78) 13.35 (31) 7.05 (56) -38.54 (21) 34.47 (47) 29.09 (36) -2.91 (54) 14.59 (22) 43.30 (44) 5.60 (14)

IM U.S. Small Cap Growth Equity (MF) Median 8.73 10.46 7.72 -43.15 34.12 27.62 -1.98 13.09 42.58 1.81

International Equity

Artisan International Inv 16.27 (45) 25.56 (56) 19.73 (10) -46.96 (96) 39.77 (16) 5.91 (74) -7.26 (14) 25.39 (4) 25.18 (9) -0.97 (12)

MSCI EAFE Index (Net) 13.54 (55) 26.34 (37) 11.17 (72) -43.38 (62) 31.78 (56) 7.75 (60) -12.14 (49) 17.32 (64) 22.78 (17) -4.90 (39)

MSCI AC World ex USA Index (Net) 16.62 (40) 26.65 (36) 16.65 (19) -45.53 (84) 41.45 (11) 11.15 (23) -13.71 (78) 16.83 (69) 15.29 (82) -3.87 (27)

IM International Large Cap Equity (MF) Median 14.85 25.86 12.63 -42.43 32.33 8.82 -12.35 18.57 20.27 -5.35

Returns for periods greater than one year are annualized.Returns are expressed as percentages.

Page 20

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

TRP Retirement Balanced TRP Retirement 2005 TRP Retirement 2010

TRP Retirement 2015 TRP Retirement 2020 TRP Retirement 2025



BlackRock S&P 500 Stock Dodge & Cox Stock Columbia Mid Cap Index Z

Baron Growth Inst Artisan International Inv

-12.0

-8.0

-4.0

0.0

4.0

8.0

12.0

16.0

20.0

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, 2015

Calculation based on monthly periodicity.

Page 21

Fairfax County Public Schools – Watch List Review

Given the detailed fund review of the PIMCO Total Return Fund over the past several quarters, the committee

decided to change the watch status. After careful monitoring and discussion of continued headlines and

organizational developments at PIMCO during the December 17, 2015 meeting, it was decided to retain the

fund and continue to monitor the strategy closely.

The committee decided to replace the Columbia Mid Cap Index strategy, following a “Sell” rating from the AHIC

Global Investment Management team, with the Vanguard Mid Cap Index option.

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

3rd

Quarter

2015

2nd

Quarter

2015

1st

Quarter

2015

4th

Quarter

2014

U.S FIXED INCOME

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

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

PIMCO Inflation Response MultiAsst Inst No No No N/A 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

BlackRock S&P 500 Stock No No No No No Buy Green Green Green Green

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

Columbia Mid Cap Index Z No No No No No Sell Red Green Green Green

Baron Growth Instl No No No No Yes Qualified Green Yellow Yellow Yellow


Artisan International Inv No No No No Yes Qualified Green Green Green Green

Status Number of Criteria Met Suggested Action Green 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 22

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 23

Fairfax County Public Schools 457(b) Plan As of September 30, 2015

Investment Option Participants Investment Options Participants

Great West Portfolio 1,051 One 541

PIMCO Total Return 1,165 Two 364

PIMCO Inflation Response MultiAsst 25 Three 265

T Rowe Price Retirement Balanced 37 Four 333

T Rowe Price Retirement 2005 14 Five 288

T Rowe Price Retirement 2010 14 Six 278

T Rowe Price Retirement 2015 39 Seven 194

T Rowe Price Retirement 2020 74 Eight 20

T Rowe Price Retirement 2025 77 More than Eight 27

T Rowe Price Retirement 2030 60



T Rowe Price Retirement 2045 41 Item Result

T Rowe Price Retirement 2050 28 Participation Rate 60.65%

T Rowe Price Retirement 2055 39 Number of Participants with Account Balances 2,310

BlackRock S&P 500 Stock 945 Average Deferral Rate 17.03%

Dodge & Cox Stock 1,028 Average Number of Funds per Participant 3.62

Columbia Mid Cap Index 1,209 Average Account Balance $67,728.49

Baron Growth 1,193

Artisan International 1,177

Investment Option Participants Item Result

Great West Portfolio 75 Number of Internet Accesses 8,108

PIMCO Total Return 98 VRU Calls 257










BlackRock S&P 500 Stock 47

Dodge & Cox Stock 57

Columbia Mid Cap Index 85

Baron Growth 78

Artisan International 68

* Information directly provided by Great West Retirement Services.

Demographic Information

Participants per Investment Option

Participants with Balance in One Investment Option Administration Statistics

Investment Options per Participant

Other Demographics

Page 24

457(b) Plan Statistics

457(b) 403(b) Contributions Sept 2013 $ 1,357,000 $ 3.3 million Contributions Sept 2014 $ 1,345,000 $ 3.3 million Contributions Sept 2015 $ 1,432,000 $ 3.4 million Contributions Oct 2015 $ 1,301,000 $ 3.5 million Assets Sept 30, 2013 $138.4 million Assets Sept 30, 2014 $153.8 million Assets Sept 30, 2015 $156.8 million Assets Oct 31, 2015 $164.2 million Number of Participants Nov 2013 2251 5296 Number of Participants Nov 2014 2263 5342 Number of Participants Nov 2015 2244 5351 Average Contribution/Month – Sept 2013 $970/mo; $120/biweekly Average Contribution/Month – Sept 2014 $956/mo; $149/biweekly Average Contribution/Month – Sept 2015 $963/mo; $126/biweekly

403(b)

Average Contribution/Month – Sept 2015 $707/mo; $151/biweekly Number of Employees Currently Contributing to 457(b): 1393/mo; 61/biweekly Number of Employees Currently Contributing to 403(b): 4878/mo; 473/biweekly Number of Employees Currently Contributing to both 457 & 403(b): 424 total

Page 25

403(b) Plan Participants

Age Monthly Bi-Weekly

<21 0 0

21-25 57 3

26-30 388 10

31-35 574 22

36-40 579 35

41-45 689 48

46-50 643 77

51-55 685 93

56-60 674 84

61-65 441 54

66-70 118 23

71-75 29 11

76-80 1 10

81-85 0 3

Total 4878 473

0

100

200

300

400

500

600

700

800

<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

10

20

30

40

50

60

70

80

90

100

<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

Enro

llme

nt

Age Range

403(b) Bi-Weekly Plan Participants

Page 26

457 Plan Participants

Age Monthly Bi-Weekly

<21 0 0

21-25 15 0

26-30 49 0

31-35 123 4

36-40 127 3

41-45 175 8

46-50 191 14

51-55 266 12

56-60 243 8

61-65 160 8

66-70 36 4

71-75 8 0

Total 1393 61

0

50

100

150

200

250

300

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

rollm

en

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

Enro

llme

nt

Age Range

457 Bi-Weekly Plan Participants

Page 27

Fairfax County Public Schools 457(b) Plan

Contribution Analysis

Stable Value16%

Fixed Income10%

Real Return0%

Large Cap Blend (Passive)

14%

Large Cap Blend (Active)

9%

Mid Cap Blend12%

Small Cap Growth12%

International13%

Lifecycle14%

3rd Quarter 2015 Contribution Allocation

Stable Value17%

Fixed Income10%

Real Return0%

Large Cap Blend (Passive)

16%Large Cap Blend

(Active)10%

Mid Cap Blend14%

Small Cap Growth12%

International10%

Lifecycle11%

2nd Quarter 2015 Contribution Allocation

Page 28

Relative Ranking (3 Years Rolling) Relative Performance (10/01/05 to 09/30/15)

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 Barclays Aggregate Index

0.0

25.0

50.0

75.0

100.0

Re

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k

12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 9/15 Cumulative Annualized Over/Under Relative Performance

Over/Under Performance

0.0

2.0

4.0

-2.0

-4.0

-6.0

Re

turn

(%)

10/05 10/06 10/07 10/08 10/09 10/10 10/11 10/12 10/13 10/14 9/15

Number ofObservations

>=Median Top Quartile Bottom Quartile >PIMCO Total Return Adm >Barclays Aggregate Index

PIMCO Total Return Adm 20 16 8 1 N/A 19

Barclays Aggregate Index 20 0 0 2 1 N/A

Style History Sep-2015 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 5/99 11/00 5/02 11/03 5/05 11/06 5/08 11/09 5/11 11/12 5/14 9/15

PIMCO Total Return Adm 09/30/15

Page 29

Relative Ranking (3 Years Rolling)

Relative Performance (09/01/11 to 09/30/15)


PIMCO Inflation Response MultiAsst Inst PIMCO IRMA Benchmark

0.0

25.0

50.0

75.0

100.0

Re

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15


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

PIMCO Inflation Response MultiAsst Inst 5 0 0 5 N/A 5

PIMCO IRMA Benchmark 5 0 0 5 0 N/A

Cumulative Annualized Over/Under Relative Performance Over/Under Performance

0.0

3.0

6.0

9.0

-3.0

-6.0

Re

turn

(%)

9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15

PIMCO Inflation Response MultiAsst Inst 09/30/15

Page 30

Asset Allocation for 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 US Equity Non-US Equity Specialty Funds*

________________________________

* Specialty Funds include T. Rowe Price Real Assets Fund

Page 31

Asset Allocation: T. Rowe Price Retirement Funds

Balanced Fund

2005 Fund

2010 Fund

2015 Fund

2020 Fund

2025 Fund

2030 Fund

2035 Fund

2040 Fund

2045 Fund

2050 Fund

2055 Fund

2060 Fund

Fixed Income 60.5% 60.7% 54.7% 45.1% 36.7% 28.6% 21.6% 15.4% 10.5% 10.4% 10.3% 10.3% 10.4%

T. Rowe Price Inflation Focused Bond 30.9% 17.7% 15.7% 10.9% 6.6% 3.6% 1.6% 0.6% 0.6% 0.6% 0.6% 0.5% 0.5%

T. Rowe Price New Income 20.4% 29.4% 26.7% 24.0% 20.6% 17.2% 13.7% 10.3% 6.9% 6.7% 6.7% 6.7% 6.7%

T. Rowe Price High Yield 3.3% 5.1% 4.6% 4.0% 3.5% 2.8% 2.3% 1.7% 1.1% 1.1% 1.1% 1.1% 1.2%

T. Rowe Price Intl Bond 2.9% 4.2% 3.8% 3.4% 2.9% 2.4% 1.9% 1.4% 0.9% 0.9% 0.9% 0.9% 0.9%

T. Rowe Price EM Bond 3.0% 4.3% 3.9% 3.6% 3.0% 2.5% 2.0% 1.5% 1.0% 1.0% 1.1% 1.0% 1.0%

U.S. Equity 25.6% 25.4% 29.1% 34.6% 40.5% 45.7% 50.1% 54.0% 57.2% 57.4% 57.4% 57.3% 57.4%

T. Rowe Price Value 0.0% 0.0% 0.0% 3.0% 7.3% 11.0% 14.2% 17.2% 19.5% 19.6% 19.6% 19.8% 19.5%

T. Rowe Price Equity Index 500 21.1% 1.1% 24.3% 22.1% 18.1% 14.9% 12.3% 9.3% 7.5% 7.4% 7.4% 7.4% 7.5%

T. Rowe Price Growth Stock 0.0% 0.0% 0.0% 3.5% 8.0% 11.8% 14.8% 17.9% 20.1% 20.3% 20.3% 20.2% 20.3%

T. Rowe Price Mid-Cap Value 1.4% 1.3% 1.5% 1.8% 2.2% 2.5% 2.7% 3.0% 3.1% 3.2% 3.2% 3.1% 3.2%

T. Rowe Price Mid-Cap Growth 1.3% 1.3% 1.4% 1.7% 2.1% 2.3% 2.6% 2.8% 2.9% 2.9% 2.9% 2.9% 3.0%

T. Rowe Price Small-Cap Value 0.6% 0.6% 0.7% 0.8% 1.0% 1.1% 1.2% 1.3% 1.4% 1.4% 1.4% 1.4% 1.4%

T. Rowe Price Small-Cap Stock 0.6% 0.6% 0.7% 0.9% 1.0% 1.1% 1.2% 1.3% 1.4% 1.4% 1.4% 1.4% 1.4%

T. Rowe Price New Horizons 0.5% 0.5% 0.5% 0.7% 0.8% 0.9% 1.0% 1.1% 1.2% 1.1% 1.1% 1.1% 1.1%

Non-U.S. Equity 12.4% 12.4% 14.4% 17.3% 20.2% 22.8% 25.2% 27.2% 28.7% 28.6% 28.7% 28.7% 28.7%

T. Rowe Price Intl Growth & Income 3.7% 3.7% 4.3% 5.1% 6.0% 6.7% 7.5% 8.2% 8.5% 8.5% 8.5% 8.5% 8.5%

T. Rowe Price Overseas Stock 3.4% 3.4% 3.9% 4.7% 5.6% 6.3% 7.0% 7.6% 8.0% 7.9% 7.9% 7.9% 7.9%

T. Rowe Price International Stock 3.1% 3.1% 3.6% 4.4% 5.1% 5.7% 6.3% 6.8% 7.2% 7.2% 7.2% 7.2% 7.2%

T. Rowe Price Emerging Markets Stock 2.2% 2.2% 2.6% 3.1% 3.6% 4.0% 4.4% 4.7% 5.0% 5.0% 5.0% 5.1% 5.0%

Real Assets 1.4% 1.5% 1.7% 2.1% 2.4% 2.8% 3.1% 3.3% 3.5% 3.5% 3.5% 3.5% 3.5%

T. Rowe Price Real Assets 1.4% 1.5% 1.7% 2.1% 2.4% 2.8% 3.1% 3.3% 3.5% 3.5% 3.5% 3.5% 3.5%

MM/Short Term Investment 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% 0.0% 0.1% 0.1% 0.1% 0.1% 0.2% 0.0%

Summit Cash Reserves 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% 0.0% 0.1% 0.1% 0.1% 0.1% 0.2% 0.0%

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 32




TRP Retirement Balanced TRP Retirement Income Index

0.0

25.0

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100.0

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15


>=Median Top Quartile Bottom Quartile >TRP Retirement Balanced >TRP Retirement Income Index

TRP Retirement Balanced 20 18 3 0 N/A 18

TRP Retirement Income Index 20 10 0 5 2 N/A


0.0

2.0

4.0

-2.0

-4.0

Re

turn

(%)

10/05 4/06 10/06 4/07 10/07 4/08 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 9/15

TRP Retirement Balanced 09/30/15

Page 33




TRP Retirement 2005 TRP Retirement 2005 Index

0.0

25.0

50.0

75.0

100.0

Re

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15


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

TRP Retirement 2005 20 18 13 0 N/A 18

TRP Retirement 2005 Index 20 15 7 3 2 N/A


0.0

2.0

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-4.0

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(%)

10/05 4/06 10/06 4/07 10/07 4/08 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 9/15

TRP Retirement 2005 09/30/15

Page 34





0.0

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15






0.0

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Page 35





0.0

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15






0.0

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Page 36





0.0

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12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15






0.0

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Page 37





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Page 38





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Page 43




BlackRock S&P 500 Stock S&P 500 Index

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

BlackRock S&P 500 Stock 20 20 7 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

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BlackRock S&P 500 Stock 09/30/15

Page 44




Dodge & Cox Stock S&P 500 Index

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

Dodge & Cox Stock 20 13 11 3 N/A 11

S&P 500 Index 20 18 5 0 9 N/A


Cap

ital

izat

ion

Manager Style

Large Cap Growth


Large Cap Value



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Dodge & Cox Stock 09/30/15

Page 45




Columbia Mid Cap Index Z S&P MidCap 400

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Columbia Mid Cap Index Z 20 20 9 0 N/A 0

S&P MidCap 400 20 20 10 0 20 N/A


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Large Cap Value



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Columbia Mid Cap Index Z 09/30/15

Page 46




Baron Growth Rtl Russell 2000 Growth Index

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Baron Growth Rtl 20 14 0 1 N/A 8

Russell 2000 Growth Index 20 18 5 0 12 N/A


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Large Cap Growth


Large Cap Value



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Baron Growth Rtl 09/30/15

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

Artisan International Inv 20 17 15 1 N/A 19 16

MSCI EAFE Index (Net) 20 13 1 0 1 N/A 11

MSCI AC World ex USA Index (Net) 20 9 2 10 4 9 N/A


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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

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Artisan International Inv 09/30/15

Page 48

Fairfax County Public Schools As of September 30, 2015

Peer Group $ Weighted $ Weighted

Median Median Average Average Difference2

U.S FIXED INCOME

Great West Portfolio Fund Stable Value 0.89%3

N/A N/A 0.54%4

N/A N/A

PIMCO Total Return Adm US Broad Market Core Fixed 0.71% 0.53% 0.43% 0.58% 0.43% 0.13%

PIMCO Inflation Response MultiAsst Inst Flexible Portfolio 0.98% 1.00% 1.01% 1.11% 0.97% -0.13%

TARGET DATE

T. Rowe Price Retirement Balanced Mixed Asset Target Today5

0.57% 0.55% 0.16% 0.53% 0.32% 0.04%

T. Rowe Price Retirement 2005 Mixed Asset Target Today5

0.59% 0.55% 0.16% 0.53% 0.32% 0.06%

T. Rowe Price Retirement 2010 Mixed Asset Target 20105

0.59% 0.59% 0.57% 0.58% 0.46% 0.01%


0.63% 0.61% 0.40% 0.60% 0.40% 0.03%


0.67% 0.65% 0.57% 0.61% 0.47% 0.06%


0.70% 0.65% 0.61% 0.64% 0.44% 0.06%


0.73% 0.67% 0.65% 0.66% 0.53% 0.07%


0.75% 0.69% 0.59% 0.68% 0.47% 0.07%


0.76% 0.70% 0.66% 0.69% 0.55% 0.07%


0.76% 0.70% 0.46% 0.70% 0.46% 0.06%


0.76% 0.70% 0.65% 0.70% 0.52% 0.06%

T. Rowe Price Retirement 2055 Mixed Asset Target 2055+5

0.76% 0.70% 0.66% 0.67% 0.48% 0.09%

U.S. EQUITY

BlackRock S&P 500 Stock S&P 500 Index Funds (Passive) 0.04% 0.20% 0.05% 0.28% 0.09% -0.24%

Dodge & Cox Stock U.S. Large Cap Core Equity 0.54% 0.85% 0.61% 0.88% 0.58% -0.34%

Columbia Mid Cap Index Z U.S. Mid Cap Core Equity 0.20% 0.06% 0.06% 0.11% 0.07% 0.09%

Baron Growth Inst U.S. Small Cap Growth Equity 1.04% 1.24% 1.20% 1.32% 1.21% -0.28%


Artisan International Inv International Equity All6

1.17% 1.04% 0.74% 1.04% 0.76% 0.13%

Fund NameFund's

Expense

Ratio

1 All information, unless noted otherwise, was created using Morningstar audited expense ratio data as of December 31, 2014. 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.

Cost Analysis

Expense Ratio Peer Group Data1

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

Page 49

Manager Research

Page 50

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

Organizational Developments at PIMCO

Wells Notice – Pertains to the valuation of smaller sized positions in non-agency MBS purchased by the

Total Return ETF between February 29, 2012 and June 30, 2012 – Regulatory investigations are not uncommon among large, global financial institutions – All SEC investigations are conducted privately

Recent Legal Headlines

– Bill Gross filed a civil lawsuit against Pacific Investment Management Co., and its parent, claiming that he was “pushed out” in September 2014 after resisting an effort by executives to “move PIMCO in a riskier direction”

– The suit seeks over $200 million in damages – PIMCO’s position is that the complaint has no merit for a variety of reasons and their legal

team will be responding in court in due course

AHIC Ratings of PIMCO products are currently unchanged, and we will continue to closely monitor developments

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

PIMCO Total Return Cash Flows & Performance

Cash Flows – PIMCO’s flagship product, Total

Return Fund, has experienced slowing net outflows over the course of 2015, as performance and confidence in the new management team has grown

– The mutual fund size as of September 30, 2015 was $95.5 billion, down significantly from its peak of $293.0 billion in May 2013.

Performance

Date Total Net Assets Total Net Flows 9/30/2015 $95,521,141,788.00 -$2,348,000,000.00 8/31/2015 $98,101,442,648.00 -$1,804,700,000.00 7/31/2015 $100,993,552,764.00 -$2,254,700,000.00 6/30/2015 $102,842,237,254.43 -$3,001,338,104.64 5/31/2015 $107,311,175,638.69 -$2,713,495,894.82 4/30/2015 $110,398,154,792.67 -$5,649,836,355.99 3/31/2015 $117,397,864,805.97 -$7,250,136,613.11 2/28/2015 $124,709,543,322.96 -$8,629,688,721.44 1/31/2015 $134,634,548,159.20 -$11,617,331,789.46

12/31/2014 $143,358,386,043.55 -$19,412,812,682.03 11/30/2014 $162,809,878,013.76 -$9,484,754,960.33 10/31/2014 $170,898,644,476.23 -$27,465,268,189.29 9/30/2014 $201,585,256,696.61 -$23,494,731,371.02

– Relative Rolling Performance vs. the Barclays Aggregate Index since the departure of portfolio manager, Bill Gross (September 2014) has been generally favorable with a tough month in September 2015 impacting trailing results.

9/30/2015 8/31/2015 7/31/2015 6/30/2015 5/31/2015 4/30/2015 3/31/2015 2/28/2015 1/31/2015 12/31/2014 11/30/2014 10/31/20141 Month -1.15 -0.66 0.50 0.20 -0.14 -0.22 -0.15 0.23 0.54 -0.58 0.30 -0.193 Months -1.32 0.04 0.56 -0.16 -0.51 -0.15 0.62 0.18 0.25 -0.486 Months -1.45 -0.47 0.41 0.45 -0.34 0.10 0.141 Year -1.37

For the Period Ending:

Aon Hewitt 23 November 2015 Retirement and Investment

Risk. Reinsurance. Human Resources.

Flash Report

Retirement of Gregory Serrurier a member of the Investment Policy Committee (IPC) & International Investment Policy Committee (IIPC) effective June 30, 2016 Dodge & Cox has informed us of Gregory Serrurier’s upcoming retirement from the Firm effective June 30, 2016. Mr. Serrurier joined Dodge & Cox in 1984 and has over 30 years of investment experience. Mr. Serrurier is currently a member of both the IPC and the IIPC, the decision making bodies responsible for the US Equity and International Equity strategies respectively. Mr Serrurier will resign from both the IPC and IIPC effective March 31, 2016. There is no set target number of individuals required for each investment committee, however, the Firm reassesses the membership of every committee at each year end and any changes are communicated in the following January or February.

The Global Investment Management team recommends clients take no action with respect to both the US Equity and International Equity strategies, both of which remain Buy rated. We have historically noted and continue to believe that Dodge & Cox’s investment team contains a large number of high quality, experienced and tenured individuals.

Aon Hewitt Retirement and Investment Proprietary and Confidential

Flash Report:– Dodge & Cox 2

Disclaimer This document has been produced by the Global Investment Management Team of Aon plc. 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 Aon Centre The Leadenhall Building 122 Leadenhall Street London EC3V 4AN

Copyright © 2015 Aon plc

Aon Hewitt 31 October 2015 Retirement and Investment


Flash Report

T. Rowe Price

Update: Changes to T. Rowe Price Retirement Strategies

Recommendation

T. Rowe Price (TRP) is making a few changes to their Target Date Fund (TDF) offerings. TRP has announced

four broad changes to their Target Date Fund (TDF) offerings including the renaming of certain suites and

vehicles, the introduction of a lower fee institutional mutual fund share class, and the use of passive indexing in

capacity constrained areas.

Global Investment Management (GIM) understands the reasons for the TRP changes and continues to rate TRP’s

flagship TDF called the Retirement Funds offering a Buy while the TRP’s lower equity glide path called the Target

Funds and TRP’s Hybrid are not currently rated.

Background

Change #1: Taxonomy: Renaming Target collective trusts and funds

TRP solutions are evolving and they have recognized the need to have taxonomy and naming convention that

allows for easier differentiation between TRP products and their distinct objectives.

TRP will be renaming their collective trusts as well as the Target Retirement Funds:

• Effective January 1, 2016:

Retirement Active Trusts will change to Retirement Trusts

Retirement Date Trusts will change to Retirement Hybrid Trusts

• Effective February 1, 2016:

Target Retirement Funds will change to Target Funds

Aon Hewitt Retirement and Investment

Flash Report – T. Rowe Price 2

Change #2: I Class Rollout – TRP is expanding their offerings to provide investment portfolios with lower

shareholder servicing costs:

Retirement I Funds (Flagship Glide path) – I Class - Effective October 1, 2015

• TRP has incepted a new family of mutual funds that will invest in the same 18 underlying funds as the

Retirement Funds.

• This product is designed to meet the needs of certain intermediaries and institutional clients seeking to

externalize shareholder servicing costs.

• The underlying components of the new fund family will invest in the lower cost, institutional I Class of the

18 underlying funds.

• Similar to the existing Retirement Funds, there will be no management fee charged to the Retirement I

Funds - I Classes, and each I Class will indirectly bear its pro-rata share of the expenses of the

underlying I Class in which it invests. However, the Retirement I Funds - I Classes will bear their own

operating expenses.

Target Funds (Lower Equity Glide path) – I Class - If approved by proxy, anticipated in 2016:

• If approved by shareholders, the Target Funds will be restructured to allow for an institutional share class,

in place of launching an additional target date family.

• The Target Funds’ underlying components will invest in the same 18 underlying, lower cost institutional I

classes as the Retirement I Funds - I Classes.

• Consistent with the current expense structure of the Target Funds, there will be no management fee

charged to the Target Funds after the restructuring and each Fund will continue to indirectly bear its

pro-rata share of the expenses of the underlying Funds in which it invests. However, each class of the

Target Funds will bear their own operating expenses going forward. NOTE: A contractual expense

limitation will be implemented for each Fund to ensure its total expense ratio resulting from the

change is equal to or less than its current total expense ratio.



Change #3: TRP Collective Trust Eligibility and Pricing:

TRP’s Collective Trust Eligibility prior to October 1, 2015:

• Available to qualified retirement plans that meet at least one of the following criteria:

Plan with assets >$1 billion.

Plans with assets >$500 million and ≤$1 billion, where

• the plan has decided to map at least $50 million at inception, or

• the plan has decided to use the collective trust vehicle as the default option.

Plans with assets >$250 million and ≤$500 million, where

• the plan has decided to map $50 million at inception, or

• the plan has decided to use the collective trust vehicle as the default option in a

reenrollment program.

Collective Trust Eligibility effective October 1, 2015:

• $50 million initial investment regardless of plan size

Trust Pricing Changes effective January 1, 2016:

Retirement Trusts

• First tier (≤ $500 million) will be 54 bps (58 bps prior to January 1, 2016)

• All other pricing to remain the same on Retirement Trusts, Retirement Hybrid Trusts, and Target

Retirement Trusts.



Change #4: Underlying Passive Strategies: The continued growth and adoption of target date funds by defined contribution retirement plans has prompted

TRP to consider new ways they might invest in certain sectors — such as U.S. small-cap and mid-cap equities —

where investment capacity is more limited.

• The TRP Retirement Funds, Retirement Trusts, and Target Funds currently include the Extended Equity

Market Index Strategy within their line-up of underlying investments at a zero strategic allocation. To

date TRP has made no passive mid- or small-cap investments.

• In order to better prepare for the possible future use of passive investments, TRP is creating two passive

strategies to replace the Extended Equity Market Index Strategy.

• In early 2016, these two new strategies will replace the Extended Equity Market Index Strategy at 0%

neutral allocations.

• The new passive small-cap strategy is designed to replicate the performance of the Russell 2000 Index,

and the new passive mid-cap strategy is designed to replicate the Russell Select Midcap Index.

• This will not require changes to the existing glide paths or the underlying sector allocations within TRP’s

target date strategies. TRP will continue to anticipate their allocation to active strategies would remain

greater than their allocation toward passive options within the small- and mid-cap space.



Disclaimer This document has been produced by the Global Investment Management Team of Aon plc. 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.



Appendix

Page 60

Fairfax County Public Schools – Mid / SMID Cap Candidates

Columbia Mid Cap Index

Vanguard Mid-Cap Index Fund

Institutional Shares

Vanguard Extended Market Index Fund Institutional Shares

Strategy AUM (B$) $3.7 B $66.3 B $43.8 B

Inception 3/31/2000 5/21/1998 7/7/1997

Ticker NMPAX VMCIX VIEIX

Benchmark S&P MidCap 400 Index CRSP US Mid Cap Index S&P Completion Index

Investment Minimum N/A $5,000,000 $5,000,000

Expense Ratio 0.20% 0.08% 0.08%

Page 61

Aon Hewitt Retirement and Investment Proprietary and Confidential


InBrief: Vanguard Passive Equity Strategies

Review Date Overall Rating Previous Overall Rating November 2015 Buy No Change

Overall Rating Vanguard has demonstrated an ability to provide a broad platform of passive equity products which closely track their respective indexes. The large size of the manager’s passively managed equity assets and its unique mutual ownership structure allow Vanguard to minimize costs and offer its index funds at reasonable expense ratios. Research conducted by the firm is well-respected in the passive management industry and has directly impacted the construction methodologies of various index providers. We believe Vanguard is among the best in class within the passive equity manager universe.

Firm Summary Head Office Location Malvern, PA Parent Name 100% Owned by member funds Firm AUM $3.1 trillion Investment Staff 304 (6/30) Equity AUM $2.0 trillion Equity Staff 71 Note: Unless otherwise noted AUM data is as of September 30, 2015.

Investment Manager Evaluation Rating Sheet

Factor Rating Previous Rating Comments

Business 4 No Change

With a wide range of funds and significant assets in passive equities, Vanguard has demonstrated a long-term commitment to the passive equity business. The firm has a unique ownership structure whereby it is owned by its member funds, which are owned in turn by their mutual fund investors. This ensures that firm profits are returned to their ultimate owners (the mutual fund investors) in the form of lower fees.

Investment Staff 4 No Change

Vanguard has a stable and deep investment staff, comprised of equity index portfolio managers, dedicated traders, and dedicated risk management professionals, all of whom oversee the firm’s equity index portfolios. Vanguard’s equity indexing team is also supported by senior management within the organization. Joseph Brennan is Head of Vanguard’s Equity Index Group. Mr. Brennan has been with the organization since 1991.

Investment Process 4 No Change

Management of the Vanguard equity index strategies aims to fully replicate the respective index holdings for the majority of its funds. For index securities that are subject to higher trading costs, as well as liquidity and market constraints, Vanguard uses a reasonable form of optimization to replicate the characteristics

Page 62


InBrief – Vanguard – Passive Equity Index Funds 2

Rating Sheet

Factor Rating Previous Rating Comments

of these securities in a way that maximizes the correlation of the portfolio with the benchmark and minimizes the risk of performance deviations. The research of the Quantitative Equity Group (QEG) has resulted in consistent enhancements to the techniques employed to reduce tracking error. A large trading group and proprietary trading software aids in minimizing deviations from benchmark performance.

Risk Management 4 No Change

Vanguard measures risk for its equity index funds primarily in terms of tracking error. Deviations from the index are monitored very closely by the portfolio management team. In addition, a separate risk management group carries out additional oversight. Vanguard also employs a very conservative securities lending program that minimizes the risk of withdrawal gates and fund losses.

Operational Due Diligence Pass No Change

Policies and procedures in place from both a trading and compliance perspective are satisfactory.

Performance Analysis 4 No Change

Vanguard has closely tracked the benchmarks of its various passive equity products over historical time periods.

Non-U.S. mutual funds will be impacted by fair value pricing which can cause tracking error to appear abnormally high over certain time periods.

Terms & Conditions 3 No Change

Vanguard offers low fees compared with other passive equity providers. Given the mutual fund structure for most of its passive equity products, a scaled fee schedule that provides very large accounts with fee advantages is not typically available.

Overall Rating Buy No Change

Vanguard has demonstrated an ability to provide a broad platform of passive equity products that closely track their respective indexes. The large size of the manager’s passively managed equity assets and its unique mutual ownership structure allow Vanguard to minimize costs and offer its index funds at reasonable expense ratios. Research conducted by the firm is well-respected in the passive management industry and has directly impacted the construction methodologies of various index providers. We believe Vanguard is among the best in class within the passive equity manager universe.

Page 63



Manager Updates and Monitoring

Major Developments

There are no major developments to report

Key Monitoring Points

There are no key monitoring items to report at this time.

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Ratings Explanation Below we describe the criteria which we use to rate fund management organizations and their specific investment products. With the exception of Operational Due Diligence ("ODD"), each component is assessed as follows:

The ODD factor can be assigned a Pass, Conditional Pass, or Fail rating and can be interpreted as follows:

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 and 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.

Qualitative Outcome

1 = Weak

2 = Average

3 = Above Average

4 = Strong

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Disclaimer

This document has been produced by the Global Investment Management Team of Aon plc. 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.



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