We made several adjustments within the U.S. Sector strategy to maintain our desired fundamental exposures as the underlying holdings of several sector-based ETFs in the portfolio changed. As previously announced, Standard & Poor’s and MSCI decided to reorganize their Global Industry Classification Standard (GICS) at the end of September 2018 to create a new “Communication Services Sector.” This new sector combined the former Telecommunication Services Sector with media, advertising, and entertainment companies taken from the Consumer Discretionary Sector, and with certain internet and entertainment software companies taken from the Information Technology Sector. Correspondingly, various ETF sponsors adjusted the underlying holdings within ETFs that are based on the affected sectors.
To account for changes in sector classifications and sector-based ETF composition, we modestly reduced exposure to the Consumer Discretionary and Information Technology Sectors and added exposure to the new Communication Services Sector. These adjustments did not reflect any change in our economic outlook or our desired fundamental exposures for the portfolio. Instead, they were intended to keep portfolio exposures in line with our existing outlook as the underlying holdings within certain ETFs changed. In conjunction with these adjustments, we also conducted a full rebalance of portfolios.