We have a quorum neck general Public Comment shall be followed we will go into closed session and not start the regular Public Meeting before 2 00 p. M. Is there any Public Comment about this item . We are in meeting is back in session. We will recognize a commissioner for emotion regarding the closed session. I make a motion not to disclose. It was seconded to do not to not disclose. Is there any Public Comment . My name is john, i am a 44 year member of our pension scheme. If theres any policeman on our board, you might be interested in what i have to say today. Willie sutton was a Notorious Bank Robber in the 1980s. When he was caught, they asked him why he robbed banks. His reply was, thats where the money is. The Hedge Fund Industry are not bank robbers, but they are modernday highway robbers. The definition of modernday highway robber is by excessive profit by high risk investment. If you ask the Hedge Fund Industry when they rip off local pension funds, they will say, that is where the big money is. If you put one more dollar in hedge funds, you are likely to get a report. It is titled a giant pile of money. Should be downloaded. I have said it before and i will set it again, hedge funds are high risk, low cost, low liquidity investment and should follow the lead of calpers and invest in them as soon as possible. Even if you Board Members have beginners luck in the hedge fund, your luck will eventually run out, and not only that, our members might thank you are great investors, and that is a good excuse to lower contributions. My two minutes is up. Thank you. Those in favor . Aye. Opposed . That takes us to item four. General Public Comment. Would anyone like to comment . Mr. Weiner, please. I would like to make a suggestion for two potential investments. One is in space technology, which is going to take i think it will be a real growth industry. The second is in automobiles because i think electric cars are going to be a thing of the future. Those automobile stocks will go through the roof. I know there are more tesla cars on the road and these are two possible investments i would like to see. Thank you. Thank you. That takes us to item five. Approval of the minutes of the july 10th meeting. Are there any additions, corrections, or deletions . A motion to adopt is an order. Move to approve. Second. Motioned and seconded. Public comment . All those in favor say aye. Aye. Opposed . That takes this item seven, investment calendar. One item. Mr. Coker, you have the floor. He missed the consent calendar. Excuse me i skipped the minutes to the consent calendar. Number 6. Does anybody wish that any item be set aside for separate consideration. I will make the motion to adopt the consent calendar as submitted. Motioned and seconded. Is there Public Comment . All those in favor say i all those in favor say aye. Aye. Opposed . Item seven. Board members, we have the final date at now for fiscal year in june. It was still estimated as we said in the final line of the first paragraph. I will ask alan to make some quick comments on our relative it has been an interesting six months. Three years ago you adopted a more consvative Asset Allocation policy. You took money to fund absolute return and you funded private debt. Through the end of last year, in a very rocky environment, you did very well. You are one of the few public funds in the country to generate a positive return. We sit at the time youre positioning is excellent. But here we are in january, we have trade wars happening, we have issues in a ran, we have slowing growth in the u. S. , isnt it nice we have a conservative portfolio . And we have just seen the sixth month of the highest equity returns we have seen in a long time. So how did you do . I am pleased to say that bill mentioned eightpoint to 8. 2 for the fiscal year. 7. 6 per annum for the five years of the end of june 30th, and tenpoint for and 10. 4 . Every one of those numbers as well above your assumed rate. On a competitive basis, that 8. 2 is the best performing public fund in the investor universe. I found one or two others that may have done better, but that is a spectacular result. For the three years, the top four , for the five years, top we . Extraordinary. And again, i would attribute much of that too late change in strategy that ironically was to position you for rougher times ahead because of the current level of the markets and maybe because of it certainly in the Fourth Quarter. You have done well in your manager selection and portfolios added to it. You will hear these in detail at the september meeting where we will get into the attribution, but congratulations. It is a very strong result. Board members, the equity market was up more than 19 through the first seven months. Our returns for july were up 14 basis points. It wasnt a lot of net to movement. They were back and forth through july. The market ended up 30 basis points. This is proving to be a pretty tough month for august. The markets are down, more than 5. 5 the first 14 days. As of last night when the markets were down almost 3 , our return was down about 1 or a little bit less than that. That is what we are designed to do. We are designed to earn good, longterm returns and minimize the impact caused by a large market decline. The market environment, a couple of quick comments here, is you see on page 2, on the two charts , is the valuations really do not present much of a headwind. They did a while back, but the earning growth last year was very strong, and the markets were down. That brought valuations back down to a more normalized environments. You will see on page 3, you know , in the long run, stock returns should resemble Earnings Growth, plus dividends. We now have low dividend rates around 2 . And more recently, Earnings Growth has slowed significantly, and that is because of a couple of factors, the comparisons to prior year become more difficult and Economic Growth has also recently slowed from about 3 . The current projections right now are for the quarter end, somewhere around 1. 8 . I do want to point out on page four, if you look under the line item titled training pe, and you go over to the far right, the trailing pe is exactly the same as the average of the last 20 years. The take a look within sectors, and that is technology where we have indicated that we have a material overweight, is the valuations are about 20 less than the 20 year average. We are also overweight healthcare, and valuations there are about 10 less than the 20 year average, even as the a last chart on page four, technology and healthcare have earned, by far the strongest returns, nearly 13 and about 12. 5 respectively, compared to the equity market as a whole of 10 . We think we are wellpositioned from a sector perspective. What we really care is of bout security selection and manager selection. But from a sector perspective, we think that we are very well positioned to to continue to do well. Page five im sorry, can i just go back and ask a question about the earningspershare growth . Yeah. Im looking at that chart under the second point. Are you on page three . Yes. You are comparing the 502 e. P. S. Growth. Is the return indicated on this chart . Is the return indicated here, no. It is just the earningspershare growth of the 500 . That is correct. Thank you. I misunderstood. Okay. If we turn to page five, a couple of things to note. What are factors that cause their market . Some pundits are always interested in this. You see it over on the far right in the second chart. Extreme valuations have only been present in six of 13 bear markets. Not particularly predictive. It also doesnt take major spikes in Interest Rates as per aggressive action. It doesnt take commodity spikes , either. The one factor that has been most common in major markets, of the 13, is that 11 coincided with recession. Whether or not recession causes the markets or the markets lead to recessions, is a point to debate, but the enemy of returns , bottom line, is recessions. You tend to have a major decline in Earnings Growth, plus combined with deteriorating sentiment. Page six, we see this is now the longest expansion in history. We are now at 121 months, including july. A concern that i have and some others have is on page six and seven, is the debt ratio to the u. S. Government. We are now well over 90 . We were at 40 just a decade or so ago, and a worry is that in the next down toren, is what firepower does the government have in terms of Monetary Policy to act as a contract to market to increase spending . That will just turn debt ratios to plunge when you have increasing spending and you have reduced inflow from taxable income. This, to me, is a major worry. Just the rising levels of debt amongst governments, not just in the u. S. , but throughout the developed world. We do have a couple of closings to announce if i can get my hands on those. These are items that were previously closed in closed session. Here we are. Blackstone real estate, we asked for 50 million and we got the equivalent of 50 million. Technically 44 Million Euros which closed last week. The strategy, we asked for 200 million, and i will ask david to clarify whether or not this is the reading here says 50 million and 50 million in the institutional strategies l. P. Im not sure whether that is supposed be a total of 100 million or a total of 50 million. David . A total of 50 million. So, anyways, this is the strategy here in berkeley that we asked for the board to approve back in june. We are currently recruiting for a security analyst and venture capitalist. We received Significant Interest in that. Again we will begin to interview in a number of weeks. I dont think we actually reported this last month. It was in the report, but i dont think we verbally announced it, first it was voted public pension plan of the year by Institutional Investor for technically a small category, which they defined as 15 billion. I was hoping i wouldnt have to explain to the board how we were voted pension plan of the year for 15 billion. Does that mean we lost 10 billion . But it is quite a distinction that staff and consultants on the board should all be very proud of. I was in the room when this was announced, and theres hundreds and hundreds, i think theres probably 1500 Pension Plans that could have qualified for this and there were hundreds of imminently talented investors in the room. We should all be quite honoured and humbled to be recognized with such a distinction. That concludes the report. Discussion only. Good job. Let me make two observations. It was nice of you to bring this to our attention. I ask asked that we recognize our whole staff for this honour that we have received. Coincidentally, i believe our consultants, i think the reps of a left for the day, that they were honoured as being the best consultant in two categories to include their discretionary product. And i will recognize a former manager of ours who is also was honoured as the best hedge fund manager. Sheer coincidence, ancient history if nothing else, we will move onto the next item. Eight. Compensation Committee Report do we need Public Comment even on discussion only . Yes. Any Public Comment on the report . I would just like to say, i disagree with your Investment Consultants. Ten year returns of 10 off, spectacular results, they are not spectacular results. You have a high risk and low liquidity investment portfolio. Let me give you the information here from the Vanguard Research department. This is on passive investments. [indiscernible] this is going back 92 years, 10. 1 . That is 100 in stocks. 100 in bonds, 5. 3 . [indiscernible] these impassive investments are passive investments, not paying expensive Investment Consultants , just passive investments. And ive said before, you only need three Asset Classes to stop bonds and real estate. Let me give you the ten year returns in those investments. The vanguard, ten your performance tenure performance, 14. 7 . The vanguard balance index, ten year tenure annual performance, 10. 3 . The Vanguard Real Estate index, 15. 3 . These are all passive investments and you thank you are getting spectacular results of a 10 return on high risk investments . That is a load of baloney and i thank you should liquidate all your investments and just have three investments in stock, bonds, and real estate his. Those are the only three Asset Classes you need. Item eight. The first compensation Committee Report. This item was continued from the july 10th, 2019, retirement board meeting. Commissioner bridges, would you care to make the report . I will make the report along with the director. He got my brain going. Thank you. Yeah, at the june, we had two different Compensation Committee meetings over the last several months, and i believe at bear with me, i wanted to pull up the materials. At the february meeting, we had covered the minutes and an update on administration costs, and update unstable value, and also we received a report on those transitions and the targeted funds. And then at the june meeting, we had done the meeting minutes, as well as approved the loan policy , which was at the full board which we had just approved last month, as well as the platform, and also discuss Advisory Services that was approved by the board last month so that covers the last couple of meetings that we had with the Compensation Committee. Everything was covered in both those meetings. At this point we are reporting that piece to the full board. That is right. This is discussion item only. Is there any questions . Any Public Comment . That concludes item eight. Item nine. Action item. Approval of the selfdirected brokerage platform. This item was also continued from the july 10th, 2019, retirement board meeting. Thank you. Good afternoon, commissioners. We have several items fee this afternoon. The first one being the platform as part of our transition, we will also change our provider dependent on the record keeper. When the board approved them as the tpa in january, that included tda as theyre preferred provider. We have historically used them with the prior record keepers until credentials in 2014, and as we began the process, we transitioned back to tda and it made sense to reconsider which investment should be available on the platform. As you know, the platform is currently a mutual fund only, however, over the years we have received feedback to open the platform to individual stocks. Participants claim theyre more likely to join the plan if they can invest directly in companies such as apple or disney, or environment leaf and they companies such as idea or patagonia. This is particularly meaningful to employees in the department of the environment, as they are learning on investing in a variety of holdings within the mutual fund offerings. Committee members have also expressed an interest in ets as they can be a lowcost offering compared to mutual funds in some cases. The item was brought to us for consideration in june, and at that meeting, staff reviewed t. D. A. As incoming divider and discuss whether the platform should include other investments outcomes of that discussion included clarifying the universe of permissible investment and establishing procedures required for compliance. Staff narrowed down the permissible investments to mutual funds, e. T. S. And u. S. Publicly offered securities as advised by outside council. We have also worked to develop a quarterly monitoring for the permissible investment in the events that the securities change the registration or Company Turns into a pink sheet. The retirement board is not responsible for monitoring the performance of these investments they are, after all, selfdirected. As such, when the platform is open to e. T. S. And u. S. Publicly offered securities, users will be required to complete a release form to identify the board, the plan, and spur the election. Staff is currently working to develop and he consent, electronic consent process and anticipates rolling this out with online enrolment early next year. Until then, users may continue to access a mutual fund only platform. We will now walk the board through the presentation. Good afternoon, commissioners i will start and just give a quick overview to familiarize yourself with what participants are used to with regards to credentials, and then we will look at t. D. Ameritrade and compare and contrast. You will find they are very similar, and then we will get into some of the details in terms of what dianne just said in terms of potentially opening it up to other security types outside these four ones. On slide one, we give a summary, and i will hit a couple of the highlights. You will note in terms of prevalence within your plan, as of june 30th, there was 195 participants utilizing the brokerage account, and it is just for mutual funds only. Is about 15 million of total fund assets. There is a restriction, a hard cap. Participants can only have 50 of the balance. There is a 50dollar annual charge. You will see, and we will look at ameritrade sidebyside, the brokerage window offers a broad swath of mutual funds, over 12,000. Importantly, again, it is just mutual fund only in the current environment credential. We will look at it in a little more detail in the next slide. In terms of who is t. D. Ameritrade, they have picked t. D. Ameritrade as their partner and they have been together since 2006. Theyve got this well ironed out in terms of what we call the plumbing, the interchange between them and t. D. Ameritrade the plan used to have t. D. Ameritrade. They are a fairly wellknown brokerage provider. The securities will transfer inkind, so there will be no disruption from a participant perspective. There is no Fee Associated with doing that. They do charge a 50dollar per participant fee, and that is charged on a monthly basis, 4 4. 17 will come out of the account each month, where is currently a credential is 50 in january for the entire year whether you stay in or dont. You will see theyve got 4,500 no transaction fees, and then we will talk about some of these details on the sidebyside basis, but the conclusion is they are very similar in terms of their cost and accessibility from the mutual fund standpoint. Lastly, they have 517 other plans with t. D. Ameritrade. Again, it is a wellworn path. Slide three, if you wouldnt mind, it shows a sidebyside. Again, you can look as you go down the different rows, we just saw these quantitative factors, whether it is cost or access to mutual funds, it is very comparable. As dianne had noted, the t. D. Ameritrade is expected to roll out electronic, and that is something that we would look to in 2020. Costs are associated down in the bottom two rules and rose, and very comparable. The next slide takes a little look at some of the decisions on the table here. You will note that as the plan as a plan sponsor, you can offer some restrictions to how you implement the brokerage account. Currently, in that first bullet point, mutual funds are currently offered. You dont currently offer etf or other publicly registered securities, so that is really a potion of the recommendation to include these security types to potentially broaden it and offer more choice to purchase to participants. They do not have a firm view that every client should have full access or not. It really becomes more of a subjective benefit policy, if you will, to allow participants to have more choice. We believe your core plan really offers a great list of Investment Offerings already. In terms of prevalence of the client place with t. D. Ameritrade, youll see the lion share almost at 80 that offer the full brokerage and what we mean by full brokerage, that is mutual funds, e. T. F. And publicly traded securities. Both stocks and bonds, stocks and u. S. Only exchanges. No foreign exchanges allowed. On the next slide, we just get into, from a broad perspective, just a global restriction that they have worked out so you dont have to make decisions on this, but just as an f. Y. I. , these are some that would be excluded or not allowed within the t. D. Ameritrade, and these are very not uncommon, but these are things like short sales, security lending, very easily. Types of securities or investment functions. Things like pink sheets, foreign exchanges, alternative investments, things that t. D. Ameritrade would not be able to value on a daily basis or trade on a daily basis. This recommendation is with these restrictions. The way you said it made it sound like it wasnt forcing these restrictions. These are enforced by t. D. Ameritrade. This is not a decision for you. When you open it up, it comes with these restrictions, just to be clear. They are blocked from buying the securities. I just wanted to highlight that there are already decisions made so that you can implement this in a very efficient manner. Finally, if you will turn to the last slide, we will just summarize the next steps in terms of confirming that it works with the planning document and we have confirmed that we have already worked with t. D. Ameritrade on setting up a process for ongoing, and it is just a look to see if participants start using it, we are at 195, currently. We will continue to monitor the fees that are charged, and we have looked at that. Again, it is very competitive and favourable. And then we will run those quarterly screens just to make sure theres nothing that pops up on that restricted list that i already outlined. That is the ongoing process. And they have set up a system that will identify any security that might go to a pink sheet or have some sort of reregistration security, which can happen in various situations. And we will receive a copy of those . Yes. From that, we will update the ips and certainly as we are going through the transition, having steady calls with both t. D. Ameritrade with credential, just to make sure everything is going to transfer in kind, and those that wont, making sure we have made arrangements properlys participants as needed. I will stop there and pause for any questions. Is there a motion on the recommendation from the committee . The committee did follow up on this. The committee is recommending it. Based on the research in the Background Information and our staff. We have a strong recommendation to adopt this. When we are considering a motion, to be addressed in the motion slide four, offering e. T. F. In the existing stock and bond . Im sorry . I think that was a decision that we had. Actually, opening it up beyond mutual funds, so the recommendation would be to approve opening this up to include mutual funds, e. T. F. , and u. S. Exchange. All of the above. That is a full recommendation. And to commissioner driscoll s point, city would also be included. Commissioners, do you have a question . No, you just answered it. Does that cause a recommendation to make a motion . I will motion it. Second. I think it should be explicit about we shall include the list of restrictions, meaning so people cannot buy it. The way it is written it is a little vague to me. Okay. Redo the motion to include that. How do we include the word exclude . By going with t. D. Ameritrade , you have no option to include the restrictions, so it is inherent. We can certainly clarify it and just say we would open it up to include the restrictions and the Restricted Securities as listed in the presentation, but that is not an option. T. D. Ameritrade does not allow you to cherry pick and say, i want to allow, you know. The platform is already restricted. But we can clarify the motion i want it spelled out here. Sure. I will spell it out in my motion. [laughter] i will move to approve this with the restrictions as stated by t. D. Ameritrade on the subject matter. Thank you. Great. Will the board be voting on the amended policy statement next month . The policy statement will be updated when we actually open up the flat form which we have targeted to the early part of next year as we are developing and he consent process. They mutual funds platform will remain the same and they will be able to access that. As far as opening up the platform to e. T. F. And individual security, that is happening towards the beginning of the following year. The beginning of next year because we need to develop it to indemnify the board and the plan and defer from participant investments. And when that happens, we will update the i. P. S. Which will occur, the board voting or this new and more open selfdirected brokerage account . I believe we would bring it to the board to approve it before we opened it up, but again, the timing will not be for next month because there will be other i. P. S. Changes as a result of our transition so timeline would be october or november at the earliest, but certainly we can shoot to get the Investment Policy Statement in advance of opening up this new feature at the beginning of next year, or expanding it. That is the point i am trying to get at. People will see this and say it is not open until we complete several other administrative steps. We will say it wont be available before the end of the year but we are getting the boards approval to move in that direction. The concerns were raised at the Committee Level of does that expand the liability of the board by allowing, you know, folks to go in and do their own trading, and so this consent form is the language that basically says that if i choose to go through here, i accept all liability for my decisions. I will not blame the retirement board or the deferred Comp Committee or anyone else. So that is the important piece before we with roll this out. Will the board have to vote on that statement . No. But the board does have to vote on the i. P. S. . Yes and it does not open it up until they amend the i. P. S. We will make sure they get in front of the board before we open it up. Good point. We will definitely do that. It will not be september. Thank you. The motion has been amended and made and seconded. Time for Public Comments. Next year, there is probably an 80 chance that we will have a Worldwide Global recession. And in global recession, essentially Investment Capital should gravitate to low and moderate risk investments, not highrisk investments like hedge funds. Let me give you six indicators of a recession, and they are all in place right now. First one, reversal of the yield second reason, overvalued stock markets. Third reason, very low Interest Rates. Fourth reason, international instability. Fifth reason, increase in prices , sixth reason, one of my favourites, as im a big follower of warren buffett, there are 122 billion in cash. Why do they have 122 million in cash . Richard hathaway shall he only likes to have 20 billion in cash, not five times 100 on that i hope you all remember the advice that he gave our pension fund. Index funds will be a better investment than hedge funds. So please keep that advice in mind and take it. Thank you. Questions . We are not allowing alternative funds on this list. They are on the restricted list. Correct . Correct. Some people might see hedge funds as alternatives. There are no private places for that. I just wanted clarification as what we are allowing. Any Public Comment . Those in favor say aye. Aye. Opposed . Next item. Investment Performance Review of the deferred compensation program. Thank you. Commissioners, twice a year we attempt to brief the board of the performance of the investments that make up our core lineup of about 3. 6 billion in total assets. Callum will now walk you through the performance through june 30 th, 2019. We will jump right in. I have included the executive summary on the very first slide, just to recap some of the Key Highlights that i would like for you to take away anti elevator pitch version. The plan is valued at 3. 6 billion on june 30th. So everything in the report is through june. Keep in mind it represents a substantial increase of roughly 382 million since the start of the year. A lot of that came through investments. It has been a great period to be an investor pick investments in dollar terms over 361. There was a net cash inflow of 21 million for the year so far. The target date funds, you will see the performance when you look at the most conservative, out of the most aggressive. The roughly had the same return at about 3 . That is because stocks and bonds really performed very similarly with yields falling and bonds kept pace with the broad equity market. We do have two recommendations that we will be bringing to the deferred Compensation Committee. The upcoming september meeting. Both are watchlist candidates. The first is galley art, which is a stable value manager, out roughly 1 billion or so in the plan assets. It is your most conservative manager. Earlier this year they did make some organizational changes. Theres four key leadership positions that are going to be retiring and various different trenches over the next three years or so. That wont become effective until next year, so i just did an onsite and their office is in minneapolis, minnesota. On sight a couple weeks ago and i met with the executive Management Team that will be coming online in 2020. Theres really only one new employee to galley yard, and he will be copresident , with that is something we will explore more that you might have seen in the news. The second item is Morgan Stanley. They manage two portfolios. One is a u. S. Read, the other is a global within the target date Component Fund and you will see their performance in a minute. They have underperformed in recent periods. Long story short, they really have a value discipline. They are not buying many of the overpriced or perceivably, from their perspective, overpriced real estate markets, and are really heavily invested now in malls, retail, new York City Office parks that are discounted relative to the market. That has always been their philosophy. In a nutshell they are looking for the market and the economy to evolve and change, and in this very Strong Equity market that we have been in, their style has really been out of favor. See that any minute. Lastly, the passive funds continue to perform and match performance as expected. We will look at the core offerings and a few slides. In terms of broad brush strokes for page two, clearly i think theres a lot going on in the global economy. I think the fed is noteworthy. They were great. That wasnt really expected last year towards the end of the year there was this perceived expectation that, hey, maybe they will stop raising and actually pause or lower. That came to fruition. The market is expecting additional decreases in Interest Rates. And just to keep in mind, the u. S. Rates were really out of normal with the rest of the globe. Most Interest Rates are actually lower in foreign economies. China is certainly remaining a question mark. Many are active, International Equity managers and they are taking stock of what the trade war might mean, what brexit might mean and other global politics. In terms of results, i think slides light for does a nice job in terms of slide four does a nice job in contrasting what has gone on in 2019 with a very difficult 2018. Theres a lot of colours on the chart, and that is really by design. There participants have at their disposal many tools. You will note on the left side of the page of the top youll see annual returns for 2013 going down to 20 going up to 2018, and each column shows a different asset class in the return. The bestperforming asset class in that calendar year is at the top, the worst is at the bottom. For instance, for 2018, u. S. Fixed income, which is essentially zero in emerging markets and an orange down at the bottom. Down 14 . 2019, we show the monthly returns, but we turn your attention to the yeartodate which is the last column. You will see a very different story from 2018. I will bounce back years is what they often call it with large markets. This is just like the Morgan Stanley fund, which we will take a look at. A very robust market. Fixed income, you will note in the second to the bottom, this is the u. S. Fixed income. Up sixpoint one . A very strong return. Again, it was somewhat of a risk period after a really 2018 really mapped how bad the Fourth Quarter was. It was up there september of last year that the markets were going gangbusters as well. I will turn your attention to slide nine. I think this is an important point, and it is something that mr. Coker had mentioned earlier in terms of the cycle that we have been in. It has been somewhat lopsided when we look at value versus growth. I am on page nine. This is the top chart. You can see it is a long period, but and it is a bit challenging to read, but if you stay with me , you will see when growth outperforms, the lines go down. Since Global Financial crisis, which is the red line, and that is kind of the point of the story here, it has been a very long period. It is almost 12 years of growth outperforming value versus years like post tech bubble to the Global Financial crisis, or the 1980s when the value outperforms growth. What we are trying to say here is we are kind of in an extreme period relative to a very long history. It is important to think diversification, value versus growth when we look at your plan lineup and evaluate the Investment ManagersMorgan Stanley. You will see on a very long term basis on slide nine, value over a long period of time actually compounds much better than growth. You will see the green bar is accumulative return of the russell 1,000 value index, and you can see it over this time period since the late nineties. Value has actually outperformed growth even though the last 11 years has really been a growth market. I will skip over slide ten. It really kind of makes the same it is just a different way to look at similar information his with another noteworthy point. Slide 11 captures the market values. Participants really kind of have a very conservative view, many of them with 28 and stable value , and largecap is certainly an equity asset class. Individual market values can be found on the next slide, slide 12. As i already noted, the plans have 3. 6 billion as of june. You will see the change and this is just the change for the one quarter, and so the net new investments just captures the net flows either going in or out of each fund and each asset class. The total plant had a net infill of 15. 2 million. Investment results over the last quarter improved by almost 90 million at the very bottom of the page. The way i would some it up here is investment returns have been fantastic and your plan is cash flow positive, which i guess our to hook two good trends. Moving into returns, page 13, just a note, these are the target date benchmarks. You will see the last quarter, as i mentioned, 3. 1 return. It did not matter if you were older or younger, you roughly had the same return, what you will see that when you go out since the inception period. The more risks you took so the 26551 had the highest return at 8. 8 per year. This is since the Third Quarter of 2012. Again, good absolute results, the relative results relative to the benchmark. We did add that two new funds, the 2060 and 2065 funds. They will show up performance next quarter. They started in april. Looking at the core lineup on slide 14, this is what we call our stoplight sheet and you will see, just in terms of definitions here, the legends down at the bottom righthand side, the green means it is in the top half relative to peers, yellow is in the third quartile, red is in the fourth quartile, and this is a very favourable report. One is the absolute returns have been very strong, next to each return is the actual ranking. For instance, the social equity fund ranks as the top performer in that category. You will note that there is some read in the active equity. So it is three quarters the way down and third from the bottom. This is really a valley oriented discipline valueoriented discipline manager managed by fidelity. A low stock fund. They are finding value overseas right now. It is up to 40 in international securities. That obviously has been a headwind given the u. S. Has been stronger than the international markets, but they use the p. M. As an example. They really have strong conviction that the market is getting pretty crappy. I have to go out the u. S. To find good value. I could go into much more detail i was going to hit the watchlist item on the next slide, but dont let me skip over your favourite slides. [laughter] you will see the real estate fund. This is the Morgan Stanley. It certainly gets called out by the red colour, which is fourth quartile. You will see over the last year it was up 3 , right in the 97 th percentile. The index was up over 11 . Again, a lot of this is just a discipline of looking. What they do is they take every property and value it and compare it to the nad. For instance, by their research, they have shown new York City Office properties are 35 undervalued or discounted relative to the n. A. D. That is attractive. That is an overweight for them. Those two areas have really been out of favor, especially over the last year or so. That is an example of something we are digging into in a lot more detail based on their conviction and philosophy. But really, nothing has changed in the organization. So we will take that up with the deferred Compensation Committee in much more detail. The next slide just looks at the Component Funds. These are the specialized funds that are components within the target date funds that russell utilizes. You will see again, a very good story. Green across the board. These tend to be much more volatile. They go from red to green very quickly. That is just the nature of many of these markets. They are very narrow and specialized. But third from the bottom, again , that is Morgan Stanley, and you can see it stands out. This is the global fund. Again, it is roughly 53 in the u. S. And has some of the same issues that i already commented on before. Dfa world tends to be more valueoriented price to book sensitive type fund and it makes sense that growth really has been in favor for a very long and pronounced period in recent times. We expect them to underperform in that type of period. The question is, if value comes back in favor, we expect d. F. A. To really bounce back as an example. I will pause there and see if theres any questions, but that concludes my highlevel report. Board questions . I will start with one. Morgan stanley, compared to their peers in that value silo, how are they . This is a broad regroup. Value to value, how did they do . We do not get out value for those following the discounted method they do. A lot of data in this long report. I wish we could make it more readable for the members were trying to understand their quarterly statement versus what is here. Maybe with the committee we can work on an introductory statement about members get unit pricing on their statements, which does not match up with this. By the way, it is the same manager, the performance return numbers are the same, but if you follow the unit pricing, you might get confused. There is a lot of data about the weights and the different target date funds. A lot of information and you are trying to make it more readable and usable for our members because some members will read this report in detail. Other board questions . [please stand by] 2015, and now, its about 28 today, so thats a 5 reduction. Stable Value Holdings are a sign of plan health where higher allocations to stable value indicate less diversefication. As you know, our stable value provider is currently galliard. We will talk a little bit more about the watch list and what the search process would be considering our contract with galliard will be expiring in june 2020. Moving on to page 6, loans continue to be very popular, with about 40 million in outstanding loans. On day one, participants will be able to repay their own via a. C. H. , and they would be able to benefit from a direct deposit of loan proceeds. So if there are no questions on the quarterly report, id like to give you a brief update on the transition . I have some questions, actually more of informational question thats have been posed to questions that have been posed to me by some of the members, and id like to see if we can do some information gathering. Is there or is there not any legislation at the National Level to regarding the mandatory withdrawals at 70. 5 . I believe as part of the secure act, is that what youre referring, to 72 . Thats potentially i believe its hung up in the senate right now. Okay. Its in the senate. Maybe you could track that for us and have answers for the members when they give us a call. Regarding those who are on mandatory withdrawal, currently, there is no avenue for them to remain in the system, correct . So anybody thats retired cannot remain in the deferred comp system, cannot reinvest in the deferred comp system. Thats actually not true. Beiokay. Thats what i want to get to. Thats actually a good point that you brought up because i think thats a common misconception that when you retire, you have to roll your money out of the plan, and thats not the case. Weve actually done a lot of work over the past couple of years by helping people understand thats