Agenda unless otherwise noted. Thank you. Please call item number one. One is a hearing to consider appointing one member indefinite term to the close Juvenile Hall working group. Thank you. Did you have any comments before we hear from the applicant . I do. Thank you so much. As we know this is our final appointment to our 15 Member Working Group for the closed year of Juvenile Hall. We are excited to be at this point where we can point and other young person who will be serving. I am looking forward to the committee having the first meeting this wednesday and to finalize all the members of the working group. That is great news. So we have three applicants. I will call them all forward. Charles peacock, Danielle Russ wurm and julia thompson. We dont have any of the applicants. Do you have any thoughts about who you would like to see appointed, supervisor walton . I do. Thank you so much. The first thing i want to say is i appreciate everyone who applied to serve on the working group, especially our young people who are committed to the success of the other young people. I would like to nominate for vacant seat three Charles Peacock who is young africanamerican male who lives in bayview who was formerly incarcerated as a juvenile who is now working in community and is also in college at this time. I just know that he would be instrumental in helping come up with a plan that will lead our young folks to success versus continuance continuous defeat in the prison pipeline. Fantastic. Is that a motion . That is a motion to appoint Charles Peacock twoseat number three. We can take that without objection. That motion passes. Thank you. Did you want to take Public Comment . Oh, my goodness. That motion do i have to make a motion to can you undo the motion . I will rescind my motion. Without objection, that motion is rescinded. Is there anyone who would like to make Public Comment on this item . Seeing non, Public Comment is closed. I would like to move the previous motion. Without objection, that motion passes. Thank you. Sorry about that. I need to wake up. Can you please read item number two. Two is the hearing to consider appointing four members with terms ending october 19th , 2021 to the eastern Neighborhood Community advisory committee. There are several members have contacted me youre unable to attend today due to scheduling conflicts. Thank you. Are any of the applicants for the eastern Neighborhood CommunityAdvisory Board here . Please come up. Good morning. Good morning. I am very excited to stand before you today as a candidate for one of the positions on this Community Advisory group. I have served as president of the association for six years and have been involved in numerous activities in the potrero and dogpatch areas related to the increased open space and provision for better and more equitable transit and the increase in Community Serving facilities in our area. I know that theres change in the group with the removal of the south of market neighborhood so i look forward to having the opportunity to serve to ensure the impact fees for the development in our neighborhoods get the most bang for their buck and serving our existing and incoming populations. Thank you very much for considering my candidacy. Thank you so much. Is there any questions . We will open this up for Public Comment. Does any member of the public wish to speak . Seeing then, Public Comment is closed. There are four seats and four applicants. I think all applicants are qualified. Does anyone want to make a motion . Supervisor walton . Definitely want to make the motion in support of the nomination of all four candidates but i want to thank jr for coming in today and being willing to serve. This is a very Important Committee and as we continue to deal with Affordable Housing and make sure that we are responsible as we have growth in communities and voices on the intake are very important. I want to think everybody who is willing to serve ditto. Thank you so much and thank you for being here today. You made a motion to move jr a blur for seat one, irma lewis for a seat two, jolene you for c3 and Keith Goldstein for seat four. Without objection, that passes. Please read item number three. Three is a hearing to appoint one member term ending january 6 , 2024, to the Small Business commission. I see commissioner i see the commissioner here. Would you like to come up and address the board . Good morning, supervisors. Thank you for the opportunity and your consideration. I was born and raised in San Francisco in the mission district. I have a passion. Im a Small Business owner myself and just knowing the intricacies of real Small Businesses, especially businesses of color, minorities, we have a moral we have a challenge especially if english is not your language of birth. We do not get the same opportunities. Having an advocate the looks like the people we serve is very important, especially as it comes to the permitting process in San Francisco. During my 10 year, i was part of digitizing the San FranciscoBusiness Registration process, which should be something in San Francisco we should be leading the way, but it wasnt. Through my 10 year, i have done that. I have spee5 spares personally started an initiative which will get set in 2020 where we go paperless. No more stacks of paper when we or get all the pamphlets. Im implementing tablets. Those are the little things, but my countless work, you know, i know every single business in the bayview, in the mission, i dont know maybe as much as you, supervisor mar, but they know me when people have problems, they call my cell phone at whatever time. It takes years for commissioner to build up the relationship and understand the intricacies of how to open a business in San Francisco. It has taken a very long time to get to this point where we are able to help the community navigate crazy business processes. Little things like that matter in a city that they always say Small Business is our backbone, but people worked here because moved to because of the flavour of our city and our Small Businesses. I represent that. I am honoured for your consideration for another term as the office of Small Business commissioner. Thank you. Thank you so much. I wanted to thank you for all your work as the one who recruited you to move into this rollback in my legislative age days. It has been such a pleasure to watch you shine on this commission. You truly are a commissioner of the people and are so available, not only to supervisors when we have questions, but to Business Owners and helping them navigate what has become a byzantine process. We have a lot of work to do to write i think what i think we have done wrong in terms of making it virtually impossible to open a Small Business. As you said, many Business Owners go broke before they ever open. That is upsurge. We are happy to change that. It is certainly something that i am looking into and that i know many of you on the Small Business commission, together with been blame and who is an entertainment commissioner, but also a Small Business owner, are looking to all the Small Business owners to help Small Businesses and that is a phenomenal idea. I think it is way overdue and i wanted to express my gratitude to you for all of your hard work thank you. It means a lot. Of course. Any other comments . Thank you. Thank you so much. Thank you, supervisors. Is there any member of the public to speak who wishes to speak, now is your time. Public comment is closed. I would be happy to do the honours of making a motion to reappoint william to seat three of the Small Business commission seeing no objection, that motion passes you nonthem as they that motion passes unanimously. Item four is a resolution reparenting appointing harlan kelly junior for a four year term ending june 30th, 2023, as the director of San Francisco bay area Regional Water system financing authority. Would anyone like to speak . Public comment is closed. Supervisor mar . I would move that we recommend reappointment of harlan kelly as a director of the San Francisco bay area Regional Water system financing authority. Without objection, that motion passes. Is there any other items . That concludes the agenda for today. Fastest rules Committee Meeting of the year. The meeting is adjourned. Hi. My name is carmen chiu, San Franciscos elected assessor. When i meet with seniors in the community, theyre thinking about the future. Some want to down size or move to a new neighborhood thats closer to family, but they also worry that making such a change will increase their property taxes. Thats why i want to share with you a property tax saving program called proposition 60. So how does this work . Prop 60 was passed in 1986 to allow seniors who are 55 years and older to keep their prop 13 value, even when they move into a new home. Under prop 13 law, property growth is limited to 2 growth a year. But when ownership changes the law requires that we reassess the value to new market value. Compared to your existing home, which was benefited from the which has benefited from the prop 13 growth limit on taxable value, the new limit on the replacement home would likely be higher. Thats where prop 60 comes in. Prop 60 recognizes that seniors on fixed income may not be able to afford higher taxes so it allows them to carryover their existing prop 13 value to their new home which means seniors can continue to pay their prop 13 tax values as if they had never moved. Remember, the prop 60 is a one time tax benefit, and the Property Value must be equal to or below around your replacement home. If you plan to purchase your new home before selling your existing home, please make sure that your new home is at the same price or cheaper than your existing home. This means that if your existing home is worth 1 million in market value, your new home must be 1 million or below. If youre looking to purchase and sell within a year, were you nur home must not be at a value that is worth more than 105 of your exist egging home. Which means if you sell your old home for 1 million, and you buy a home within one year, your new home should not be worth more than 1. 15 million. If you sell your existing home at 1 million and buy a replacement between year one and two, it should be no more than 1. 1 million. Know that your ability to participate in this Program Expires after two years. You will not be able to receive prop 60 tax benefits if you cannot make the purchase within two years. So benefit from this tax savings program, you have to apply. Just download the prop 60 form from our website and submit it to our office. For more, visit our website, sfassessor. Org, call the meeting to order. I pledge allegiance to the flag of the United States of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. Roll call. [roll call] we have a quorum. Were going to go into close session to discuss several items. Ill make the standard order of Public Comment and instructions when we get to Public Comment at 3 30. Do we need order to go into closed session. Public comments . Seeing none, if someone wouldnt mind closing the doors. Ill turn the flor over to mr. Coker of the eight items that were listed on the closed session item there shall only be seven. With the matrix would be number seven we need a motion to cover the attorneyclient privilege as we go into closed session is there such a motion so moved second. All those in favor say aye. Public comment. All those in favor say aye. Aye. So, im going to read the motion approved by the board in regards to gregory latman versus the retirement board. The motion that was approved reads as follows set aside the hear offices november 1st, 2019 denying the application in march 2017 denying the petition for the hearing and remand the case in retirement system staff. Remand the case of the office of administrative hearings foray signment to a hearing officer as a previously assigned hearing officer retired and request the hearing officer without hearing consistent with the courts determination of incapacitated for the performer of the fire lieutenant job due to his hearing law and to deny the disability and third remand for approval at the next meeting after issues of that decision. And well have to report the vote on this matter. Right. Not to just disclose any other discussions in closed session. Do we report out the vote or do we have to vote again ill make that information . All those in favor say aye aye Public Comment. Yes. On the top he doesnt want to comment. Who made the second, im sorry i did thank you all those in favor say aye aye. Opposed. Ok, well do Public Comment and well do action items. Standard rules apply. Does anyone have a Public Comment they wish to make . My name is john stenson im a 44year member of a retirement system. At the last Board Meeting, i told you Board Members that in the future, you should not hire any Investment Consultants or chief Investment Officer who tells us its not possible to get a 7. 4 retain on investments without investing in height risk investment i. E. Hedge funds. I would like to give the investment retained of two investments going back to 1926, thats 93 years and three years before the Great Depression when stocks well 90 id like to give you the return on the van guard model portfolio that just consists of stocks and bonds for the last 93 years. 100 93 average annual, 10. 2 and 100 in bonds and 5. 3 return. 50 bonds and 5 stocks and 8. 2 annual returns and 60 stocks and 40 bonds, 8. 6 remain. 80 stocks, 20 bonds, 9. 4 return. For the past 10 years, they pass investments just having a combination of stocks, bonds and real estate about average retain of 11. 8 detained so thats why i say to you Board Members, do have anybody say they cant get you a earned 7. 4 return without having any highrisk investment. Thank you. Any other Public Comment . Im not going to follow the normal sequence because i do not want to lose the quorum. First item is 13, review and acceptance of the july 1st, 2019 supplemental cola analysis. Good afternoon commissioners, analysis has been placed before you and we have Something Different this year. Although we have charter defined excess earings as of july 12019, we did not have enough to pay the 3. 5 supplemental cola but we have enough to pay the next level 3 and just as a little interesting background, the maximum of 3. 5 has only been in existence since 2009. Before that, the maximum was 3 . And if we have any questions that i can answer i would be happy to do that. Motion to adopt staff recommendation second. Any further board questions. This action is necessary in order for staff to do the calculation and issue the check. Any Public Comment . All those in favor say aye aye opposed. Thank you. Item 5 the minutes of the previous meeting. Is there any corrections, additions or deletion move to approve second Public Comment. All those in favor say aye aye. Opposed. Consent calender. Is there any item set aside for separate consideration . A motion to adopt i move to adopt all the items on the consent calender as presented your second. Second. All those Public Comments . All those in favor say aye aye opposed. I was looking for a couple people to come and speak about item number nine but theyre not here yet so well go to item number 14 this is anna just of an industrial disability pension for joshua phillips, based on a Workers Compensation appeals board determination that the disability is rated at 90 . We would ask the board approve this adjustment moved to approve second any questions . Any Public Comment . All those if favor say aye aye opposed. Item 15. The same for sean hinson, industrial disability where the Workers Compensation appeals board determined a rating of 90 and were requesting the pension from 50 to 90 move to approve. Second. Any questions . Any Public Comments . All knows favor say aye aye. That takes us to item number nine. Yes, you will and i just want to remind the board this is a long document and weve had it in place for many years. Lets do some questions though its technically an action item. Ill make this comment up front. This is a living document. Were always either expanding it or editing or sometimes moving it around so it is differently because this one document is combined with a couple other things like the investment guidelines that we issue for our managers. Unless you had all four or five documents you may not perceive where some of these sections are being moved to. Nothing is being deleted. With one exception. Get ready to start. Go. Very good. Thank you very much, Board Members. Sem reof the changes is listed on pages one and two. You will see theres much more its much more reorganization and substance in addition to what you see here. Each asset class other than Public Markets have their own Investment Policies statement. We also plan to have public equity and Public Markets and also have their own investment policy guidelines and this document will, in the longterm, be for the management of the trust as a whole. Im going to ask curt and anna to guide us through the changes. Apologies for missing the opening remarks. Just to step back a moment. Its the framework of the manager of the spurs assets. Its meant to assist the retirement board in the monitoring of the plan. It is divided into five sections, goals, beliefs, practices and procedures and strategic allocation including definitions and duties and responsibilities. This document was updated just over two years ago and were proposing further changes but the really more a matter of housekeeping which is described earlier and we highlighted the largest changes and ill go through them quickly. We introduced investment beliefs. The key principals that drive our investment philosophies. We reorganized the document into five sections and the prior document in our opinion didnt flow particularly well. We removed the specific e. S. G. And proxy policy and as you may recall, each those areas have their own standalone policies. We approved the e. S. G. Policy at the november Board Meeting and i believe its adopted in march of 2019. It is our intent over the longterm as bill described is to move the Public Markets guidelines out of this document and they have their own stand alone guidelines but were not doing that now. In addition, we have removed tho discontinue our commission and recapture program from reasons noted in the staffs memo and any p. C. Can comment. Its just a practice thats no longer popular or prominent among pension plans. We have a formel annual requirement for each as set class and public equity real assets and absolute return, private equity and Risk Management or liquidity in Risk Management will have separate updates for the particular as set classes or subjects each year the first of these will begin in january request public fixed income and public equity. We modified the gross long and short, the allowable rages for the portfolio. As you may recall, weve done a bit in terms of adding active extension strategies this year and late last year. This just reflects the addition of those strategies. And we updated some of the core duties among each of the participants of the plan. I appreciate the Board Members dedicated to your staff and we had oneonones on going over the entire suggestion and the marked up copy and it was appreciated by thats the ex at the present time of my comments. Beef given you a clean copy and the marked copy. The marked copy is difficult to read but many of the changes that were made were just moving areas was a process all the m. D. S in each asset class as well as anna myself and any p. C. Were all involved. It was very interesting ok. Ellen has anything to add would we corporated with an apc . The one thing i would add, every plan has a document like this and its not only useful for the board, but it is a Public Document to so it informs those about your plan. Its a good thing. The addition of a belief section is important because it says how were going to operate this plan so im very supportive of that. I do want to emphasis that those beliefs should be the beliefs not just of staff or me or someone else, but your beliefs so that is important and as joe said, this is a document that will grow and if there are other things that need to be added or modified, its more than acceptable. Its huge but we can talk about this for weeks or months but we have been use north for a while. Ill make a motion and approve the recommended changes to the San Francisco city and county Employee Retirement systems policy statement. Second. Do you approve the edit . First of all, the original document was called the investment belief and policy. They were not delineated. Which is good theyre there. Its not that i have a problem with the as written, but theres a couple things that should be released that are not in this section or some place else. First one is d. S. G. Its been moved and fine but the very first statement starts with the word belief. That should be put in the investment belief and its a statement as well as if were going to try and incorporate the whole concept of all those things into all our Investment Decisions which were starting to do. We should put that up front. Not the whole section just one. Part two i pom bullet point throw about volume activity which is a correction statement however the issue of uncertainty, were also dealing with all the time. A statement such as you know certainty in the longterm increases. Its something we should be aware of. Whether or not we want to put it in the way to deal with uncertainty is we consider all possibilities and the probability of those possibilities. Its something we do but weve never stated it. Its up to the belief issues so people know were not just looking at one set of facts or opportunities at one time. You are out there looking for things. What is going to be available 10 or 20 years ago like the Artificial Intelligence that you brought to some of the speakers. Why are we listening . Its where we have to figure out how to invest in the future. The third item belongs in the belief section. You talked about it in the pressure. Its did our decision. Organizational decision quality is a result of following or getting quality into the six requirements for good decisions. As part and process that is part people. To get it all done. We make decisions all the time. The question is do we make quality decisions . Do we make good decisions. Its a process. Its not a difficult. If we believe that, it is a signal about what we should be talking about in the future and the board who should focus on the Strategic Issues while they expect all our staff to do things. Sorry i dont have pure, Crystal Clear language but this is coming up during the boards next retreat. I thought it was an opportunity to Start Talking about the investment. Commissioner, toward that end, is that a amendment to the document or im letting people know now. I havent clear language to distribute, people can read and since the Board Members have a week to look at your work, i dont expect them to digest what i put out in 10 seconds. This is a dock. Its not stopping anything. Carry on. So, what we can do is well take your suggestion and when we bring it back most likely after the retreat, well encloud those with a particular language theres a lot more coming up on this subject area this is a living document. This can still be voted on it sounds like. We can bring it out with any as set allocations changes or anything that need to be, we need to amend the document, yeah. Ok. Any further questions . I just have one question. On page 23 of the red light version, theres a change and it says, for the general consultant. This is for staff and making recommendations to the board and staff and do you view a change in your role . We are your consultant and we talked with joe about this and there was an option to change the individual duties listed under the general consultant or add the words which we did at the beginning of the paragraph to support the board through working with so with the understanding it was do do something with staff and we have an independent duty to you but we have to execute it by working with staff so that was the compromise and otherwise we have changed those duties and it was not worth it and just adding the simple line that we are accountable to the board for those activities are you still the boards consultant or staff consultant . Boards consultant. I cant be an effective consultant to the board without having a constructive working relationship. Which is why bullets points 14 are its something the board has talked about b thank you. In a table of organizations, for this whole operation, we saw it was investments and we didnt do the whole organization you would see a solid line from the consultant to the board. Theres a couple consultants that work with staff so when you see the lines, its clearly depicts the Relationship Issue did who works for and who works who and more importantly the be jeb tive decision quality is collaboration between staffing, between consultant and board and board and staff. Thats how it has to work. If were going to be good investors. A motion has been made and seconds, Public Comment . All the those if favor say aye. Aye. Opposed. Give me a second to get the calender back. That concludes the action items so we can go back into items seven report of americans on the retirement end for the quarter end of september 30th, 2019. Very good. Im going to invite allen to take this from start to finish in terms of our performance. You have the 9 30 performance report providing time weighted for periods ending 9 30 including the First Quarter of the 2020 fiscal year, it wasnt a Strong Equity market so the russell 3,000 which is all domestic security is up 1 but since this report was another 5. 3 so a relatively weak quarter but in an ongoing Major Movement up in equity. Well see the returns for three quarters you will look really good and for one year, because you had the Fourth Quarter of last year in the one year, you look very good because it wasnt a Strong Equity market. When we do this again, thats going to change because that one quarter being dropped, presuming it changes into a different environment. Im going to skip over the comments on the environment. Its very similar to what its been over the last 10 years. Steady economic growth. This is the longest upward growth in Economic Activity that weve had in recent lines but its been a low rate of growth. When you look at the economic statistics, g. D. P. Growth is positive but its dropped below three and thats what occasioned concerns in the fed and in the economist in general as to whether were going to see something worse Going Forward. As you know, the fed increased or decreased Interest Rates again and dropping the fed funds rate another 25 basis points. That led to a reaction in the long market where the 10year treasury yield dropped down to 1. 7 . Its close to the all time low. The good news is when you look back at the return of bonds over the last year, when you hold the boppedbond and Interest Rates d, you are receiving a higher rate of interest than a newly issued bond that makes your bond attractive people pitted up in price. So what you will see if you look on page its the third page. Market environment q3, 2019, if you look at one year return for the barclay is 10. 5 in bonds. Weve been telling you part of our problem investing Going Forward is a low return in bonds and just as much as we can feel good if we held the bond through now, if were trying to make a new investment in bonds looking forward, were not going to get 10 and were going to get something close tore 1. 7 . And we will address and your january meet examining row viced economic outlooks for your current as set mix and i will tell you now, that outlook for the next 10 years on a compound annual return basis is probably going to be 50 to 75 basis points lower. So our challenge to invest and earn 7. 4 is going to be harder not easier. Look back its great, we can see that weve done it. But in getting there, that happens because Interest Rates have come down and we no longer have it as a wind to our back. Its now going to make it difficult. That will, as you saw earlier in the closed session, make earning alpha in private markets in particular more important. So yo your ability to achieve tt 7. 4, 7. 3 is going to be dependent on getting morale if a from your managers and you will see in this report theres good reason to be optimistic about that. Im just going to flip you to page 10. The total Fund Performance and troy to concentrate most of my comments here. That top line is your net of fee time weighted rate of return and the ranking among 71 public funds larger than a billion dollars. If you look at the three, five and 10year numbers, 10 , 7. 97, 9. 39, all of those are better than your assumed rate and you are in the top 4 and that is top 1 and top 7 for five years and among your peers. If we looked at 7040 and the 6040 is not the one john quoted of domestic and portfolio of International Stocks if i look at the fiveyear column, your return for five years was 7. 97 , a 60 40 of International Stocks and bonds earn 6. 12. If i applied your cash flows to that the difference in dollars would be 5. 6 billion. Your ability to earn an Index International stockbond return added about 5. 6 billion. If you look at the comparison versus your policy index, the policy index is what you would have earned had you simply had managers that met the benchmark and the staff operated the portfolio. Its hard to do that when you have private markets, you cant decide you want to be 6 if you are at five you cant just get there. So the fact that youve out performed your policy index means that you have demonstrated an ability to add value and as well see in a minute, most of that value is in your manager returns and that is pretty across the board. If we look at the tables at the below, this is the volatility of the portfolio and weve consciously, in the declines and markets Going Forward, sought to have a portfolio that doesnt bounce around as much. I. E. , has less he can pity and u will see for the three and five year periods, the volatility of this portfolio has been better than or lower than 88 . Youve been in the top 12 for three years and 20 for five years in terms of lower volatility. We miri efficiency for a portfolio in terms of risk adjusted returns. That means taking the return you see above and dividing it by that standard deviation and its called a sharp ratio. If you heard earlier today, the mention that david made of how terrific a sharp ratio of one or two was, your sharp ratio was 1. 7 on the total portfolio and for five years a 1. 26. That would put you in the top 4 of your piers. Peers. It doesnt pay benefits in terms of the dollars you have, you are using them efficiently. That 6. 02 investment gain above policy is equivalent to one and a half billion dollars in assets. The assets grew from 25. 42 billion at the beginning of the quarter to 26. 5 billion at the end of the quarter and thats despite paying out 468 billion in assets. In net benefits. A very good picture. I dont think it will quite be this good in terms of relative when we add and drop this quarter. Strong performance. In terms of policy, the next page, page 21, column two is the percentage allocations to each asset class as of 9 30. Column three is the board approved policy. We put to the right an interim policy as a track being mechanism as we build out our drawdown assets. All variances from internal policy are small and all allocation are within the boardapproved policy ranges. Page 22 looks at changes overtime and so as you move through time, go from the farleft, where you had 050 in public equity to as bill mentioned earlier, a current target of 31 . When you hear investment professionals mention the term derisking, this is a picture of what derisking is. Its taking assets from your most volatile as set class, like private equity and decontributing like public equity and distributing it equally across investment opportunities. And you can see starting in 2017 when the board approved, a change in as set allocation, you can see the decline in public equity, you can see the emergence of an investment in absolute return, the little blue sliver up at the top is the addition of private debt and so you can see a progression to a more diversified portfolio. That is what the risking is about. Page 23, is just growth summary. The only real important thing on this page is if you look at the last three years, you paid out roughly 500 million a year in benefits and excess of contributions but you earned over that same period 1. 3 billion. Thats why you have a pension fund. Its not of concern. If you took that 500 million a year, you would pay out in net benefits and divide that by the asset level, its less than 2 . Your needs for cash are less than 2 of the portfolio in terms of benefit payments. Thats what allows you to consider investments in private markets where we think we can have a higher return but theyre less liquid. We tie up assets in those markets. You would be very concerned if you were illinois and that number were 10 of your plan being paid out each year. The next few charts are risk return charts. You will find consistency if them and you will find in every single period, you take lower returns, or lower risk than your peer and you earn higher returns. So if we were to just look at the chart on page 24, you will see a fiveyear chart and a 10year chart. If you look at the fiveyear chart its funds of a greater than a billion dollars plotted on a risk return scale vertical for return, horizontal for volatility or risk where youd like to be is less risk for the left and toward the stop thats called the upper quarttile. Your green square is you look less risk. I know some of them that were a little less risky. And you earned higher returns. Thats a nice place to be. You would also notice that that Black Diamond is the plot for your policy. Your actual returns are less risky than your policy and better. So you not only, through the operations of manager selection and positioning, we duced th ree risk but you added the portfolio at the same time. I thought i would do one page on attribution if you are interested. Lets go to page 32 just to set this up. We talked earlier that every quarter you are over or under your policy and thats what this chart is. Each of those bar charts is a one quarter period and then the blueline is the rolling fiveyear result. You can see that that rolling fiveyear result, while it bounces around, because you are not going to beat your policy every quarter, markets dont let you do that. You can see a clear upward trend and a lot more green, dark grown at thgrowngreen at the rie chart. Where did that out performance come from. If you take page over that period, it met its fees by 65 basis points. We subtract the policy return over five years from what you actually did and you out performed by 65 basis points. This chart breaks that down into where it came from. The detail is on page 73. For part of it, comes from how you were positioned and you can see that actually took away a little value because you were over weight to cash that cost you a little bit. And you were under weight to private equity. If you are over weight to good things, and under weight to bad things, you get a positive number and vice ver sa. It takes time to build and that as asset class has done well. Most of your return thats come where you would like it to come from and thats from manager selection effect. You see going down the page, each asset class has out performed its benchmark and most of the real out performing classes are in private markets where you are in deed strategically taking more of your investment. You have a negative with respect to u. S. Equity if you loc look t the recent per idea its gotten better so the actions weve taken there have been constructive ande and its a hih benchmark. When we redo the Asset Allocation well recommend that spread be reduced. Its not an example of under performance but an example of a very strong performing benchma benchmark. I request say its a summary and its why we have as much in private markets as we do. There are some as set class bias set class rankings later when we built this, we did not have a good universe of private debt manager. Its a new as set class for your calfer and we did build such build a universe and the reports are not reported here because we had only done it through the Second Quarter and you were in the top 1 to 5 even though its a new allocation over one, three and five years. Ill stop there. There are later, curt will introduce the managers on the watch list and they would be consistent and under performed. Just two quick comments they are not driven by a timing of the marg et cetera or a forecast or core markets. Its driven by regardless which you can see is lower than our peer and if i turn to page 33, were trying to take less risk in our peers and less risk than the markets by Asset Allocation and were trying to earn higher alpha through manager selection and you will see this 2. 47 access returns for one year. Thats the score of what it is that were trying to do to stress the importance of that, there was a day 10 or 20 years when Interest Rates were very high and you invested in the bond you were going to get 6 and equity markets as join pointed out over 100 years have generated 10 so there was a time when being index was good enough. That time is not now with Interest Rates as low as they are our ability to earn 6 in bond is gone. So when we can only expect the markets to give us maybe four to six percent to make our seven, we have to get it from somewhere and you either get it from manager out performance, potentially from leverage, which is something well talk about. You are well positioned and certainly demonstrated an ability. I didnt talk about this page because if anybody expects us to continue to add two and a half percent per year, dont. It is extraordinary and even over the five year period youve added 1 from manager effect and we hope to continue to do that allen brings up a great point. If why take any risk and eastern an extra 1 or 2 over our ironed return and in 30 years well be way over 100 funded. Its driven by expected returns and given where our yields you are and we have to take risk and pursue returns very different than a large country allocation. Board questions . About what page . Yes. Remember, your over lay in periods were market momentum is up, your over lay is pulling you back towards targets so periods of strongly rising marg et cetera cost you a little bit and where they get their money back is in periods its the ultimate rebalance and so over long periods of time when markets tend to revert to the mean, it adds value but in periods where the market is running, it tends to detract a little bit of value. On a year to date basis on the next page. And it reverts back. Yeah. Im glad you point that page out. This is the back up page. On this page you see the return of each asset class what the index is. So you see in that excess return if you flip one page forward, the page two pages forward to page 72, or im sorry, 73, thats the fiveyear numbers. And if you just go down that page, its fairly consistent that the asset class is over performed versus the benchmark which u. S. Equity trailed a little bit. This was the detail behind the page i went over earlier. Here its just a little bit more visible as to how consistent your out performance has been. It hasnt just been one asset class its across the board. More board questions. Ill start with page 58. The benchmark, i thought they had an china benchmark. Is that emerging market still there . Its not recorded here. A better benchmark for them would be an ex china. How would that i mean, to the other specialist in china weigh out, china was a big number. China is now Something Like a third of the emerging market index, soontobe more. Its soontobe or maybe its 16. Are we going to fix that . Well add that so you have that in sight. Its easy to do. Should i be concerned about sand . Its a five year number minus 1. 68. Sand is volatile. You look at that number one quarter ago. What you get with the theres a lot of plans in the core group and it would come back to us in january. Its not a pipe owe but a curious number ive been watching on page 50, where it has para metrics. Theres 70. 51 was that the equity component on top of the cash . The second column under the year to date . Where are you now . Age 50