Under the Investment Manager Monitoring Guidelines, the SBA will develop a "Watch List" to define the conditions that will cause the SBA to evaluate continued retention of an investment manager or investment product. Each quarter, SBA Defined Contribution Programs staff reviews data, analysis and recommendations from the SBA's manager monitoring consultant, Wilshire Associates. As a result of this process, investment products can be identified for enhanced monitoring (i.e., Watch Listed), which initiates a series of steps outlined in the Guidelines (provided above as a PDF).
Placing a manager on "Watch List" is an intermediate step towards either resolving the problem or terminating the manager. Please note that in providing this information, the SBA is not in any way intending to influence or inform your investment decisions. Also, this list can change at any time without prior notice from the SBA.
Products Subject to Enhanced Monitoring
Various investment products have been subjected to enhanced monitoring for performance through the time periods shown in the "Due Diligence" section. Please contact the MyFRS Financial Guidance Line toll-free at 1-866-446- 9377, Option 1, for any further questions or updated information on funds.
Various investment products are subject to enhanced monitoring at this time, and have been placed in this status for performance through the time periods shown below.
American Funds Euro-Pacific Growth Fund
For the 5-year period ending March 31, 2007, the Fund underperformed its peers and benchmark on both gross and net of fees.
However, it has only underperformed in 6 out of the last 12 quarters. Four of these quarters of underperformance have occurred since January 2006.
This poor performance is in large part due to overweighting in emerging markets and cash as new fund flows into the Fund have been strong.
American Funds Euro-Pacific Growth Fund was removed from the FRS Investment Plan Watch List in July 2007.
FRS Select U.S. TIPS Fund
The Fund is passively managed against the Lehman Brothers U.S. TIPS Index. For periods ended March 31, 2007, the Fund has under performed in
8 out of the last 12 quarters net of fees. In only two of these recent periods has the underperformance been more than 0.03%.
FRS Select U.S. TIPS Fund was removed from the FRS Investment Plan Watch List in January 2008.
*Please note that in providing this information, the SBA is not in any way intending to influence or inform your
investment decisions. Also, this list can change at any time without prior notice from the SBA.
T. Rowe Price Small Cap Stock Fund
For the 5-year period ending September 30, 2007, the Fund underperformed its peers and benchmark over the rolling 5-year period. The Funds 5-year
net information ratio is negative. The poor performance is in large part due to out-performance of more pricey stocks relative to the out-of-favor growth
stocks preferred by the Fund and the more recent underperformance of value stocks which comprise nearly half the portfolio. A growing asset base also
contributed to the Funds ability to move nimbly.
T. Rowe Price Small Cap Stock Fund was removed from the FRS Investment Plan Watch List in December 2008.
*Please note that in providing this information, the SBA is not in any way intending to influence or inform your
investment decisions. Also, this list can change at any time withou Select Yield Plus Money Market Fund.
FRS Select Yield Plus Money Market Fund
The Fund is monitored versus its benchmark, the iMoneyNet First Tier Institutional Peer Group. As of September 30, 2008, the Fund has underperformed its benchmark
by -0.40% over the past year. With an erosion of credit quality in structured products available to money market funds, it is not unexpected that the Fund would
experience lower returns than in the past. However, despite all money market managers having some credit exposure which has under performed, the Funds shorter
term performance has suffered significantly enough to begin to affect the longer term performance. The Fund underperformed the benchmark for the 5-year period.
*Please note that in providing this information, the SBA is not in any way intending to influence or inform your
investment decisions. Also, this list can change at any time without prior notice from the SBA.
American Beacon Small Cap Value Fund Performance Summary
The Fund is monitored versus its prospectus benchmark, the Russell 2000 Value Index. For the 5-year period ending December 31, 2008,
the Fund underperformed its peers and benchmark over the rolling 5-year period. The Fund has experienced underperformance versus its peer
group in 8 of last 12 quarters. The Fund's 5-year net information ratio is negative. The Fund is a multi-manager fund currently with 5
institutional managers receiving allocations. The poor performance is in part due to long term poor stock selection on the part of 2
managers allocated over 20% of the Fund's assets.
Pyramis Intermediate Duration Pool Performance Summary
The Fund is monitored versus its benchmark, the Barclays Global Intermediate Aggregate Bond Index.
For the 5-year period ending December 31, 2008, the Fund underperformed its benchmark over the rolling 5-year period.
The Fund's 5-year net information ratio is below the 0.2 criteria. The poor performance is due primarily to
overweight allocations in fixed income spread products which suffered in a market flight to quality.
*Please note that in providing this information, the SBA is not in any way intending to influence or inform your
investment decisions. Also, this list can change at any time without prior notice from the SBA.
American Beacon Small Cap Value Fund Performance Summary
The Fund is monitored versus its prospectus benchmark, the Russell 2000 Value Index. For the 5-year period ending December 31, 2008,
the Fund underperformed its peers and benchmark over the rolling 5-year period. The Fund has experienced underperformance versus peer
group in 8 of last 12 quarters. The Fund's 5-year net information ratio is negative. The Fund is a multi-manager fund currently with 5
institutional managers receiving allocations. The poor performance is in part due to long term poor stock selection on the part of 2 managers
allocated over 20% of the Fund's assets.
Pyramis Intermediate Duration Pool Performance Summary
The Fund is monitored versus its benchmark, the Barclays Global Intermediate Aggregate Bond Index. For the 5-year period
ending December 31, 2008, the Fund underperformed its benchmark over the rolling 5-year period. The Fund's 5-year net information ratio
is below the 0.2 criteria. The poor performance is due primarily to overweight allocations in fixed income spread product which suffered in
a market flight to quality.
FRS Select Yield Plus Money Market Fund Performance Summary
The Fund is monitored versus its benchmark, the iMoneyNet Institutional First Tier Index. For the 5-year period ending June 30, 2009,
the Fund underperformed its benchmark in 9 out of last 12 quarters and over the trailing 5-year period. The poor performance appears due to
some credit exposure similar to many other money market managers over the recent past.
PIMCO High Yield Performance and Organizational Changes Summary
The Fund is being placed on Watch List due to recent organizational and investment philosophy changes. In May 2009,
long time portfolio manager, Mark Hudoff, left PIMCO on his own accord to pursue other interests. A replacement portfolio manager has not
yet been selected. In addition, the portfolio has shifted focus from a bottom up security selection perspective to one that selects holdings
based on a firm wide, top down, investment theme. Wilshire conducted an on-site visit on June 3, 2009. Wilshire recommends replacement of the
Fund as an FRS Investment Plan option. A search for a replacement fund has commenced.
*Please note that in providing this information, the SBA is not in any way intending to influence or inform your investment
decisions. Also, this list can change at any time without prior notice from the SBA.
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