City of Fort Walton Beach, Florida Beal Memorial Cemetery Perpetual Care Fund Investment Performance Review Investment Advisors Steven Alexander, CTP, CGFO, CPPT, Managing Director Khalid Yasin, CIMA, CHP, Director D. Scott Stitcher, CFA, Director Richard Pengelly, CFA, CTP, Director Sean Gannon, Analyst One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, PA 17101-2044 717.232.2723 717.233.6073 fax PFM Asset Management LLC 300 South Orange Avenue Suite 1170 Orlando, FL 32801 407.648.2208 407.648.1323 fax
Financial Markets Review
QUARTERLY MARKET SUMMARY Multi-Asset Class Management Market Index Performance As of December 31, 2017 QTD YTD 1 Year 2 Years 3 Years 5 Years 7 Years 10 Years DOMESTIC EQUITY S&P 500 6.64% 21.83% 21.83% 16.79% 11.41% 15.79% 13.76% 8.50% Russell 3000 Index 6.34% 21.13% 21.13% 16.86% 11.12% 15.58% 13.50% 8.60% Russell 1000 Value Index 5.33% 13.66% 13.66% 15.49% 8.65% 14.04% 12.46% 7.10% Russell 1000 Growth Index 7.86% 30.21% 30.21% 18.08% 13.79% 17.33% 14.81% 10.00% Russell Midcap Index 6.07% 18.52% 18.52% 16.13% 9.58% 14.96% 12.76% 9.11% Russell 2500 Index 5.24% 16.81% 16.81% 17.20% 10.07% 14.33% 12.25% 9.22% Russell 2000 Index 3.34% 14.65% 14.65% 17.93% 9.96% 14.12% 11.62% 8.71% Russell 2000 Value Index 2.05% 7.84% 7.84% 19.19% 9.55% 13.01% 10.84% 8.17% Russell 2000 Growth Index 4.59% 22.17% 22.17% 16.62% 10.28% 15.21% 12.34% 9.19% INTERNATIONAL EQUITY MSCI EAFE (net) 4.23% 25.03% 25.03% 12.38% 7.80% 7.90% 6.04% 1.94% MSCI AC World Index (net) 5.73% 23.97% 23.97% 15.64% 9.30% 10.80% 8.73% 4.65% MSCI AC World ex USA (Net) 5.00% 27.19% 27.19% 15.29% 7.83% 6.80% 4.93% 1.84% MSCI AC World ex USA Small Cap (Net) 6.56% 31.65% 31.65% 16.96% 11.96% 10.03% 6.54% 4.69% MSCI EM (net) 7.44% 37.28% 37.28% 23.55% 9.10% 4.35% 2.56% 1.68% ALTERNATIVES FTSE NAREIT Equity REIT Index 1.51% 5.23% 5.23% 6.86% 5.62% 9.46% 10.48% 7.43% FTSE EPRA/NAREIT Developed Index 3.83% 11.42% 11.42% 8.16% 5.38% 7.20% 8.02% 4.09% Bloomberg Commodity Index Total Return 4.71% 1.70% 1.70% 6.62% -5.04% -8.45% -8.15% -6.83% FIXED INCOME Barclays Aggregate 0.39% 3.54% 3.54% 3.09% 2.24% 2.10% 3.20% 4.01% Barclays U.S. Government/Credit 0.49% 4.00% 4.00% 3.52% 2.38% 2.13% 3.43% 4.08% Barclays Intermediate U.S. Gov/Credit -0.20% 2.14% 2.14% 2.11% 1.76% 1.50% 2.45% 3.32% Barclays U.S. Treasury: 1-3 Year -0.28% 0.42% 0.42% 0.64% 0.62% 0.57% 0.69% 1.45% Barclays US Corp: High Yield 0.47% 7.50% 7.50% 12.21% 6.35% 5.78% 7.04% 8.03% Credit Suisse Leveraged Loan Index 1.17% 4.25% 4.25% 7.03% 4.50% 4.33% 4.68% 4.57% BofA Merrill Lynch Global HY Constrained (USD) 0.76% 10.18% 10.18% 12.45% 6.61% 5.50% 6.94% 7.91% Barclays Global Aggregate Ex USD 1.63% 10.51% 10.51% 5.90% 1.77% -0.20% 1.05% 2.40% JPM EMBI Global Diversified 1.16% 10.26% 10.26% 10.20% 7.11% 4.58% 6.72% 7.29% CASH EQUIVALENT 90 Day U.S. Treasury Bill 0.28% 0.86% 0.86% 0.55% 0.38% 0.25% 0.20% 0.38% Source: Investment Metrics. Returns are expressed as percentages. Please refer to the last page of this document for important disclosures relating to this material. 1.1
QUARTERLY MARKET SUMMARY Multi-Asset Class Management THE ECONOMY The U.S. gross domestic product (GDP) grew at an annualized rate of 3.2% in the third quarter, according to the Bureau of Economic Analysis (BEA) final estimate. Despite being slightly below the estimate of 3.3%, this has been the highest growth rate since the beginning of 2015 and the first time since 2014 that the economy grew by more than 3% for two straight quarters. This growth was supported by both business investment and consumer spending. Consumer spending added 2.2% and was the largest contributing sector to GDP growth. Unemployment fell to 4.1%, a level that normally signals full employment, although the underemployment rate is much higher at 8.1%. Non-farm payrolls had a strong October and November, adding 211,000 and 252,000 jobs respectively but slowed down in December, adding 148,000 versus the 190,000 estimated. Average hourly earnings grew 0.3% in the quarter, raising the annual growth to 2.5%. Overall the jobs report was a bit disappointing but did not raise any major red flags and shows that the economy is still growing at a healthy pace. Fourth quarter estimated year-over-year corporate earnings growth rate in the S&P 500 is 10.5%, according to FactSet Earnings Insight as of January 5, 2018, with all sectors expected to report growth. Although energy is expected to report the highest year-over-year growth, most of this is due to the low earnings from last year. The Information Technology, Materials, and Utilities sectors are expected to report double digit earnings growth while Telecom and Industrials are expected to report the lowest growth. On December 22, President Trump signed into law the Tax Cuts and Jobs Act. The reduction in the corporate tax rate from 35% to 21% is expected to boost corporate profits which would flow directly into strong earnings reports for the quarter. However, the one-time repatriation tax could partially offset some gains from companies with a large amount of assets kept overseas. QoQ% Change, SA, Annualized 6% 5% 4% 3% 2% 1% 0% -1% -2% U.S. Real GDP Growth (Seasonally Adjusted) Blue bars indicate actual numbers; taupe bars indicate forecasted estimates. Change in Non-Farm Payrolls (Thousands) 1.8% 1.2% 3.2% 3.1% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 2016 2017 2018 Change in Non-Farm Payrolls 400 10% 9% 300 8% 7% 200 6% 5% 100 4% 3% 0 2% Unemployment Rate: 4.1% 1% -100 0% Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Change in Non-Farm Payrolls (left) Unemployment Rate (right) Unemployment Rate 1.2
QUARTERLY MARKET SUMMARY Multi-Asset Class Management WHAT WE RE WATCHING The official minutes from the December Federal Open Market Committee meeting were released in early January. The Federal Reserve (Fed) hiked the fed funds rate by 25 basis points (bps) with most of its officials supporting its current plan of a gradual increase in borrowing costs. The Fed has currently penciled in three rate hikes for 2018, citing the strong labor market and the record lows for the unemployment rate. However, weak inflation could serve as the primary barrier for the pace of rate hikes. The Core Personal Consumption Expenditure (the Fed s preferred gauge of inflation) has consistently come in below the Fed s targeted 2% rate. The Fed also debated the impacts of the $1.5 trillion tax bill signed by President Trump. The Fed sees fiscal stimulus caused by the bill as pro-cyclical, which may lead to an overheating economy and rising inflation. The European Central Bank (ECB) made no changes to its deposit rate and refinancing rate in its latest policy meeting held in mid-december. The ECB s decision to cut the monthly asset purchases in half to 30 billion is effective January and will last until at least September. The European economy picked up pace in 2017. Positive consumer sentiment, declining unemployment figures and strengthening industrial production are the primary factors that drove more robust economic growth. The Eurozone Manufacturing Purchasing Managers Index reading for December reached its highest level since its inception and is widely seen as an indicator of economic growth and confidence amongst businesses across the continent. Synchronized global growth was a major trend in 2017 as most of the economies across the world experienced significant growth despite the long list of geopolitical risks that continue to dominate headlines. The pick-up in economic growth drove equity prices higher, resulting in valuations rising to above average levels; credit spreads also continued to tighten. While we expect the global economy to continue to grow at above trend levels, given the strong performance of equity markets in 2017, we believe that a pullback or correction over the next several months remains a possibility. ISM Manufacturing & Services PMI 70 65 60 55 50 45 40 35 30 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 Manufacturing Services Fed Funds Target Rate 2.5% 2.0% 1.5% 1.0% 0.5% Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 Dec '18 Dec '19 Mid Fed Funds Fed Futures (Dec 31, 2017) Fed Futures (Sep 30, 2017) 1.3
QUARTERLY MARKET SUMMARY Multi-Asset Class Management DOMESTIC EQUITY Equity markets, as represented by the S&P 500 Index (S&P), rose 6.6% in the fourth quarter, a continuation of this year s rally. The 2017 return reached 21.8%, driven by stronger corporate earnings and tax reform. Rather than having a correction as many expected, the market volatility was near all-time lows and valuations continued to rise. Returns were positive across all sectors in the S&P. Utilities was the worst performing sector with a 0.2% return on the quarter, but still did well over the year with a 2017 return of 12.1%. The top two sectors in the quarter were Consumer Discretionary, up 9.9% in the quarter and 22.9% on the year, and Information Technology, up 9.0% in the quarter and 38.8% on the year. The only two sectors in the red for the year were Energy (-1.0%) and Telecom (-1.3%) Large-cap stocks, as represented by the Russell 1000 Index, finished the fourth quarter strong, outperforming mid-cap (Russell Mid Cap Index) and small-cap (Russell 2000 Index) stocks on the quarter and for the year. Large-caps rose 6.6% on the quarter, pushing their 2017 return up to 21.7%. Mid-caps finished closely behind at 6.1% for the quarter while small-caps finished up 3.3%. Mid-caps also outperformed small-caps for the year. As has been a theme in 2017, growth-oriented indices continued to outpace value-oriented indices across all market capitalizations over the course of the year across Russell indices. The difference was greatest within large caps as growth stocks returned 30.2% versus 13.6% in 2017 for value stocks. Consumer Consumer Disc. Staples 22 21 20 19 18 17 16 15 14 13 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% S&P 500 Index Performance by Sector Periods Ended December 31, 2017 Energy Financials H'lthcare Industrials Info. Tech Materials Real Estate Telecom Utilities Q4' 17 9.87% 6.49% 6.02% 8.59% 1.47% 6.03% 9.01% 6.93% 3.22% 3.61% 0.21% 2017 22.98% 13.49% -1.01% 22.14% 22.08% 21.01% 38.83% 23.84% 10.85% -1.25% 12.11% 3 Years 12.80% 8.42% -0.18% 13.84% 8.28% 11.89% 18.72% 9.80% 4.30% 8.03% 7.44% 12 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 S&P 500 Russell 2000 P/E Ratios of Major Stock Indices* S&P 500 5-Year Average Russell 2000 5-Year Average *P/E ratios are calculated based on one-year forward estimates and adjusted to include only positive earnings results for consistency. 1.4
QUARTERLY MARKET SUMMARY Multi-Asset Class Management NON-U.S. EQUITY Developed markets outside of North America, as measured by the MSCI EAFE Index, increased 4.2% during the fourth quarter, ending 2017 strong and pushing the 2017 return to 25.0%. Performance throughout the year was consistently strong as returns were positive for 10 months and relatively flat the other two months. Singapore was the strongest performer for the quarter, rising 10.1% while Sweden was the worst performer, down 3.8%. 60% 50% 40% 30% 20% MSCI ACWI ex-u.s. Sectors Periods Ended December 31 2017 Emerging markets (EM), as measured by the MSCI Emerging Markets Index, continued its strong performance during the third quarter, rising 7.4%, pushing the year-to-date return up to 37.3%. The weakening dollar during the year was one of the key factors driving the rally in emerging markets. Mexico was the worst performing region within EM, down 8.1%. South Africa was the top performer, rising 21.4%. Within the MSCI All Country World Index (ACWI) ex-u.s., which includes both developed and emerging markets stocks, sector performance was mostly positive, with only one sector having negative performance. Materials continued its strong run and was the best performing sector in the quarter, rising 8.4%, pushing the 2017 return to 32.2% making it the second best performing sector behind information technology, which had a 51.1% return on the year. Utilities was the worst performing sector and was the only one to have a negative return on the quarter, falling 0.4% but has done well on the year up 18.6%. In both Developed markets and EM, small caps outperformed large caps. Developed small caps rose 6.1% vs. 3.9% for large caps, while EM small caps rose 9.2% vs. 7.4% for large caps. Growth stocks also outperformed value stocks in both Developed markets and EM. Developed growth stocks rose 5.2% vs. 3.2% for value stocks, while EM growth stocks rose 7.9% vs. 6.8% for value stocks. 10% 0% -10% Consumer Disc. 18 16 14 12 10 Consumer Staples Energy Financials Healthcare Industrials Info. Tech Materials Real Estate Telecom Utilities Q4 '17 6.10% 5.47% 7.39% 4.21% 1.29% 4.78% 6.21% 8.43% 5.35% 1.46% -0.44% 2017 28.11% 23.95% 16.46% 10.16% 18.14% 29.37% 51.06% 32.16% 25.89% 14.53% 18.56% 3 Years 7.99% 8.48% 6.04% -2.55% 2.81% 9.88% 18.04% 10.58% 7.75% 1.64% 1.33% 8 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 MSCI EAFE MSCI EAFE 5-Year Average P/E Ratios of MSCI Equity Indices* *P/E ratios are calculated based on one-year forward estimates and adjusted to include only positive earnings results for consistency. 1.5
QUARTERLY MARKET SUMMARY Multi-Asset Class Management FIXED INCOME U.S. Treasury Yield Curve Yields across all U.S. Treasury tenors increased except for the 30- year this quarter. The increases were greater for the shorter term as yields between the three- and 12-month tenors rose 33 to 44 bps. Intermediate-term yields increased at a decreasing rate and the 30-year fell 12 bps. This movement further flattened the yield curve, continuing 2017 s trend. As many expected, the Federal Reserve raised rates in December and are now targeting a range of 1.25% to 1.50%. 3.5% 3.0% 2.5% 2.0% 2.21% 2.41% 2.74% Investment grade fixed income returns were positive despite the Treasury yield increases. The Bloomberg Barclays U.S. Aggregate Index rose 0.39% on the quarter while the Bloomberg Barclays U.S. Universal Bond Index (which includes high yield and other allocations) rose a slightly higher 0.41%. Investment-grade credit within the Aggregate rose 1.1% and returns were tilted towards lower-quality with BBB rising 1.2%. A-rated bonds rose 1.1%, with AA (0.8%) and AAA (0.1%) lagging behind. On the speculative side of the credit spectrum, high yield represented by the Bloomberg Barclays U.S. Corporate High Yield Index rose a 0.5% as high yield credit spreads ended flat. Spreads modestly tightened over the year, leading to a 7.5% return in 2017. The fixed-rate mortgage market, as measured by the Bloomberg Barclays U.S. Mortgage-Backed Securities (MBS) Index, rose 0.2% while the Bloomberg Barclays U.S. CMBS Index (measuring commercial MBS) increased 0.4%. USD-denominated Emerging Market debt rose 0.6% on the quarter, as measured by the Bloomberg Barclays EM USD Aggregate Index. 1.5% 1.0% 0.5% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1.89% Blmbg BC U.S. Aggregate Returns for Fixed-Income Segments Periods Ended December 31, 2017 Blmbg BC U.S. Treasury Blmbg BC U.S. MBS Blmbg BC U.S. Corporate 12/31/2016 9/30/2017 12/31/2017 3mo 2yr 5yr 10yr 30yr Blmbg BC U.S. High Yield Q4 '17 0.39% 0.05% 0.15% 1.17% 0.47% 2017 3.54% 2.31% 2.47% 6.42% 7.50% 3 Years 2.24% 1.39% 1.88% 3.89% 6.35% Blmbg BC is Bloomberg Barclays. 1.6
QUARTERLY MARKET SUMMARY Multi-Asset Class Management ALTERNATIVES U.S. Real Estate Investment Trusts (REITs), as measured by the FTSE NAREIT Equity REIT Index, continued moderate gains for 2017 by rising 5.2% during the quarter. The Retail REITs sub-sector (6.8%) was the top performer for the quarter although it finished the year as the worst performing, falling 4.8%. Healthcare REITs (-5.3%) finished as the worst performing sector for the second consecutive quarter. Industrials and Data Centers had only moderate gains on the quarter but ended 2017 up 20.6% and 28.4% respectively during the year. 25% 20% 15% 10% 5% 0% FTSE NAREIT Sectors Periods Ended December 31, 2017 Private real estate, as measured by the NCREIF Index of 7,161 commercial properties nationwide, increased 1.7% during the third quarter (fourth quarter data is not yet available). The third quarter return consisted of 1.1% income return and 0.6% appreciation. Commodities, represented by the Bloomberg Commodity Index of 19 raw materials futures, had a strong quarter, rising 4.4% and pulling the annual return out of the red to 0.8%. Oil prices were one of the factors contributing to the strong return as oil ended at $60.4 per barrel, up from $51.7 per barrel at the beginning of the quarter. Commodity-related equities, as measured by the S&P North American Natural Resources Sector Index, followed last quarter s rebound with another strong quarter, gaining 5.9%. Hedge funds rose 2.5% during the fourth quarter. The HFRI Fund Weighted Composite Index, a global index of over 2,000 hedge funds, has increased 8.5% during the year. After a disappointing third quarter, private equity fundraising rebounded in the fourth quarter with strong results. According to Preqin estimates, 261 funds closed during the quarter, raising a combined $162 billion in investor commitments. This was a record setting year as 1,420 total funds closed, raising $754 billion in 2017. -5% -10% Apartments Diversified Healthcare Hotels Industrial Office Retail Storage Q4' 17-1.48% -1.96% -5.26% 5.36% 1.78% 3.34% 6.79% 3.30% 2017 3.72% -0.10% 0.87% 7.16% 20.58% 5.25% -4.77% 3.74% 3 Years 7.49% 3.11% -0.15% 0.24% 17.38% 6.10% 0.17% 10.25% 25% 20% 15% 10% 5% 0% -5% -10% Returns for Alternative Assets Periods Ended December 31, 2017 U.S. REITS International REITS Commodity Futures Commodities Sources: Bloomberg and Hedge Fund Research, Inc. HFRI Fund Weighted Comp. Q4' 17 1.51% 6.39% 4.39% 5.94% 2.51% 2017 5.23% 20.82% 0.75% 1.23% 8.54% 3 Years 5.62% 6.03% -5.45% 0.11% 4.20% 1.7
QUARTERLY MARKET SUMMARY Multi-Asset Class Management Investment Strategy Overview For the First Quarter 2018 Asset Class Our Investment Preferences Comments U.S. EQUITIES Large-Caps Small-Caps NON- U.S. EQUITIES Developed Markets Non-U.S. Small-Caps Emerging Markets FIXED INCOME Long Duration, Interest- Rate-Sensitive Sectors Credit-Sensitive Sectors REAL ESTATE ALTERNATIVES Hedge Funds Private Equity Continued positive earnings growth as well as economic sentiment should continue to provide a favorable environment for large-caps. Small-cap are expected to be beneficiaries of lower corporate taxes, although higher than average valuations is a headwind. International valuations remain cheap relative to domestic markets while central banks still appear relatively accommodative. While geopolitical risks have declined, risks still exist, especially within Asia. Improving earnings and stronger global economic growth are supportive of emerging markets; rising U.S. interest rates and a possible strengthening U.S. dollar may act as headwinds Rising interest rates will act as a headwind for longer duration, interest sensitive fixed income securities. Tighter spreads and the new tax law are headwinds for credit instruments remaining, but as the global economy continues to show improving growth and default rates remain low, we continue to favor credit sensitive over interest sensitive fixed income investments. Real estate returns face headwinds from rising interest rates. Still, a healthy economy and modest fundamentals should support moderate net operating income growth. Due to rising assets under management and the proliferation of hedge funds and private equity funds, the relative performance from alternatives is unlikely to significantly outperform publicly traded markets. Current outlook Outlook one year ago 1.8
Plan Performance Summary
City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund As of December 31, 2017 Asset Allocation & Performance Allocation Performance(%) Market Jan-2017 1 1 3 5 Since Inception Value % 2017 To Quarter Year Years Years Inception Date ($) Dec-2017 Total Fund 2,835,022 100.00 3.89 15.81 15.81 15.81 N/A N/A 7.66 02/01/2015 Blended Benchmark 3.66 15.01 15.01 15.01 N/A N/A 6.96 02/01/2015 Domestic Equity Vanguard Total Stock Market Index 1,106,783 39.04 6.34 21.17 21.17 21.17 11.08 15.55 12.49 02/01/2015 Russell 3000 Index 6.34 21.13 21.13 21.13 11.12 15.58 12.54 02/01/2015 T. Rowe Price Dividend Growth 98,133 3.46 5.83 19.32 19.32 19.32 10.88 14.83 19.10 12/01/2016 S&P 500 6.64 21.83 21.83 21.83 11.41 15.79 22.18 12/01/2016 International Equity Vanguard Total International Stock Index 206,950 7.30 4.88 27.55 27.55 27.55 8.53 7.12 19.61 10/01/2016 MSCI AC World ex USA (Net) 5.00 27.19 27.19 27.19 7.83 6.80 20.00 10/01/2016 Vanguard International Value 161,104 5.68 4.90 27.96 27.96 27.96 7.74 7.35 17.62 05/01/2016 MSCI AC World ex USA (Net) 5.00 27.19 27.19 27.19 7.83 6.80 17.04 05/01/2016 J. O. Hambro International Select 185,008 6.53 4.05 22.89 22.89 22.89 7.44 12.55 13.70 01/01/2016 MSCI AC World ex USA (Net) 5.00 27.19 27.19 27.19 7.83 6.80 15.29 01/01/2016 Oppenheimer International Small-Mid Company 103,608 3.65 6.25 38.30 38.30 38.30 16.68 18.30 15.64 04/01/2015 MSCI AC World ex USA Smid Cap Index (Net) 6.07 30.35 30.35 30.35 10.69 9.14 10.11 04/01/2015 Fixed Income Baird Core Plus 319,586 11.27 0.56 4.65 4.65 4.65 3.15 2.91 2.52 02/01/2015 Blmbg. Barc. U.S. Aggregate 0.39 3.54 3.54 3.54 2.24 2.10 1.58 02/01/2015 DoubleLine Core Fixed Income I 142,995 5.04 0.47 4.66 4.66 4.66 3.12 2.97 0.09 09/01/2017 Prudential Total Return 96,074 3.39 1.03 6.33 6.33 6.33 3.48 3.18 0.65 09/01/2017 Blmbg. Barc. U.S. Aggregate 0.39 3.54 3.54 3.54 2.24 2.10-0.09 09/01/2017 Vanguard Interm-Term Invest. Grade 319,771 11.28 0.19 4.26 4.26 4.26 3.27 2.86 2.45 02/01/2015 Blmbg. Barc. U.S. Credit 5-10 Year Index 0.44 5.57 5.57 5.57 3.81 3.30 2.90 02/01/2015 Vanguard High Yield Corporate 88,349 3.12 0.11 7.13 7.13 7.13 5.58 5.21 9.14 04/01/2016 Blmbg. Barc. U.S. Corp: High Yield 0.47 7.50 7.50 7.50 6.35 5.78 11.95 04/01/2016 Cash Equivalent First American Gov't Obligation - Z 6,661 0.23 0.24 0.75 0.75 0.75 0.33 0.20 0.63 09/01/2016 Returns are net of fees. Returns are expressed as percentages. Blended Benchmark: See historical hybrid composition page for details. 2.1
City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund As of December 31, 2017 Comparative Performance 2016 2015 2014 2013 2012 Total Fund 6.46 N/A N/A N/A N/A Blended Benchmark 7.10 N/A N/A N/A N/A Domestic Equity Vanguard Total Stock Market Index 12.66 0.39 12.56 33.52 16.38 Russell 3000 Index 12.74 0.48 12.56 33.55 16.42 T. Rowe Price Dividend Growth 11.62 2.36 12.34 30.35 14.85 S&P 500 11.96 1.38 13.69 32.39 16.00 International Equity Vanguard Total International Stock Index 4.67-4.26-4.17 15.14 18.21 Vanguard International Value 4.46-6.44-6.69 22.15 20.18 J. O. Hambro International Select 5.20-4.05 5.35 38.21 15.48 MSCI AC World ex USA (Net) 4.50-5.66-3.87 15.29 16.83 Oppenheimer International Small-Mid Company -0.24 15.15 0.38 45.26 23.17 MSCI AC World ex USA Smid Cap Index (Net) 3.57 0.44-3.05 17.79 17.98 Fixed Income Baird Core Plus 4.73 0.14 6.59-1.32 7.95 DoubleLine Core Fixed Income I 4.11 0.63 6.86-1.20 8.15 Prudential Total Return 4.54-0.30 6.80-1.17 9.59 Blmbg. Barc. U.S. Aggregate 2.65 0.55 5.97-2.02 4.21 Vanguard Interm-Term Invest. Grade 3.93 1.63 5.91-1.27 9.25 Blmbg. Barc. U.S. Credit 5-10 Year Index 5.23 0.69 7.38-2.05 11.26 Vanguard High Yield Corporate 11.30-1.30 4.69 4.64 14.47 Blmbg. Barc. U.S. Corp: High Yield 17.13-4.47 2.45 7.44 15.81 Cash Equivalent First American Gov't Obligation - Z 0.23 0.01 0.01 0.01 0.01 Returns are net of fees. Returns are expressed as percentages. Blended Benchmark: See historical hybrid composition page for details. 2.2
City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund As of December 31, 2017 Account Reconciliation QTR Market Value Market Value Return On As of Net Flows As of Investment 10/01/2017 12/31/2017 Total Fund 2,728,937-106,084 2,835,022 YTD Market Value Market Value Return On As of Net Flows As of Investment 01/01/2017 12/31/2017 Total Fund 2,448,055-386,966 2,835,022 1 Year Market Value Market Value Return On As of Net Flows As of Investment 01/01/2017 12/31/2017 Total Fund 2,448,055-386,966 2,835,022 2.3
City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund As of December 31, 2017 Asset Allocation Summary Asset Allocation (%) Target Allocation (%) Minimum Allocation (%) Maximum Allocation (%) Differences (%) Total Fund 100.0 100.0 N/A N/A 0.0 Domestic Equity 42.5 39.0 19.0 59.0 3.5 International Equity 23.2 21.0 1.0 41.0 2.2 Real Estate Investment Trusts 0.0 0.0 0.0 10.0 0.0 Fixed Income 34.1 40.0 20.0 60.0-5.9 Inflation Hedge 0.0 0.0 0.0 10.0 0.0 Cash Equivalent 0.2 0.0 0.0 5.0 0.2 Domestic Equity $1,204,916.2 International Equity $656,669.4 Real Estate Investment Trusts $0.0 Fixed Income $966,774.8 Inflation Hedge $0.0 Cash Equivalent $6,661.2-5.9 % 3.5% 2.2% 0.2% 0.2% 21.0% 23.2% 39.0% 42.5% 4 34.1% -30.0 % -15.0 % 15.0% 3 45.0% 6 75.0% Target Allocation Actual Allocation Allocation Differences 2.4
City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund As of December 31, 2017 Historical Hybrid Composition - Blended Benchmark Allocation Mandate Weight (%) Feb-2015 Russell 3000 Index 42.0 MSCI AC World ex USA (Net) 8.0 FTSE NAREIT Equity REIT Index 5.0 Bloomberg Commodity Index Total Return 3.0 Blmbg. Barc. U.S. Aggregate 40.0 90 Day U.S. Treasury Bill 2.0 Jul-2015 Russell 3000 Index 39.0 MSCI AC World ex USA (Net) 21.0 Blmbg. Barc. U.S. Aggregate 40.0 2.5
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