Time is the audit that prima provides and Northern Trust. Are you familiar with this . Is that Northern Trust and prima has liquidated that they are no longer on their books, if you will . Commissioner, as i was involved in the requisition with northwestern and prima. The discrepancies in securities on books between northern and prima generally related around the securities that were moving in and out of the prima original securitization and whether or not that information was relayed timely to Northern Trust. So, for example, prima would take the exception of home loans and those would be put into a securitization. Also in some cases, prima with consultation with San Francisco would unwind some of their securitizations and prima would have possession of those and there would be delays of those arriving onto the books of the Northern Trust. That was revolved resolved in the last year because that was the work that i did. You balanced Northern Trust numbers. I made sure there were no deference in the substances between them. I wasnt focused on the other values, but the par values. Who was right, northern or prima. Dont forget, prima has the Financial Statements. Its difficult to answer because right and wrong can be miss construed in two ways. Accurate and inaccurate. There were failures of communication about the position and communication fall outs between midland and northern regarding that information and there were also communication lapses with regard to remittance reports. Thats what we cured to make sure that everybody was on the books and there was no double counting. Where double counting occurred to make sure there was no double mitigation. They were selling various securities. Thats how they have the value. They sold them and retained the other ones. The issue is that the securities they have sold or distributed have not been accounted for. So, in terms of the resolution for that, are you saying its communication between prima and the Northern Trust and other parties, are you saying thats the issue . Get me a flavor for what the problem really is . Absolutely, what i hope is a good example and someone tells me they didnt quite get it. You want a home out right. You have a deed thats not sitting in a bank. If you were to sell it, you have to deliver that title into the Title Company for closing so you can get the money and they get the title or it actually goes to the First Mortgage holder. When prima unwinds a security information. They have to hold the line for closing. Those are at primas offices. Those physical securities, many in cases these are physical as opposed to electronics. Northern was unaware, this is communication drop off i was speaking to. Prima no longer holds in their evaluates in their securities and they are held in new jersey or electric format. That was what we were working on. Is that resolved . It is resolved. So floss there is no issues in terms of the securitization issues and all the other issues and in essence Northern Trust has reconciled to primas books. Thats exactly right. The memo on page 3, pricing differences between northern and prim a they are both fiduciary issues. These are securities that are held that Northern Trust thinks they are held but in reality they are not. Prima is for that issue. To summarize in terms of the reporting issues, prima has presented audited Financial Statement and northern has balanced those for the audits and Financial Statement. Is that a fair statement . I have to say no because Northern Trust has not received the financials. Its a requisition between northern and prim a to between what northern is reporting and what prim a says should be reported. So the financials, you get a copy of the audit financials from prima. That is correct. Why dont you give those to Northern Trust so they can have them . The reconciliation is done monthly. These are annuals. It has never been an issue on that point. Its what the value is. Between northern and fiduciary . Absolutely. Im glad that you believe that. Its absolutely critical in our process because we want to make sure that northern cannot sign off on values that they cant substantiate. There was a late notice on prima because those are the values as discussed. I want to be clear they were not on these issues. Can you summarizes the issues. Primarily they were put on notice, the second the incompleteness of the reports. In the organizational issue this has been a Common Thread amongst managers. The most recent example is pimco. The market portfolios responsible for the macros and the company departed and put under review. This other company was not departed. Abundance of caution. The whole review for the review is to not react the change and to provide the board in this case, a great example, to provide the board the opportunity to come back and comment with regard to placing our manager under review. What i would like is changed for our managers because you believe its a very important issue. If you can summarize, without change and ownership for review. Even though its not going to trigger a sale that you believe its an important issue and thats the reason you are putting it on the watch list. Just to be consistent, what my concerns are consistency among all of our managers. I think its important to place in such a manager as this, with excellent performance, excellence stability. We followed greg white and schroeder because we wanted to stay with them. To me the key man is substantive. Your experience with pimco, hes gone and your regard to pimco. If you can move on with this. If you can say as a follow up with the last 2 years, all management that you put on the watches for changes. This is an inequity ownership change. My concerns are that all managers should be treated equally and fairly. Thats my concern on this. Is that doable . Absolutely. I can give you one example straight off. Great. That will end my questions. Colleagues, any other discussion on item 8 and 9. Mr. Driscoll . There was an issue with prima a few years ago. There was a question about primas performance a couple years ago with all the managers 2 years ago with the market. They didnt have to sell it. It all came back. But according to our rules we had to write it down. Thats the way we do it. The second part i would like to say i hope, i would try to treat staff fairly, all of you fairly. Sometimes it does not go on. My apologies for that. Thank you. Down on this end . No. All right. Seeing no further discussion, lets take Public Comment on items 8 and 9. Is there any additional Public Comment . Seeing none, Public Comment is closed. Now, this is a discussion item. Mr. Clerk please call the next item. City clerk item 10. Chief Investment Officer report. Im going to ask if any member of our staff has an hp 12c if you can bring it to me and i can calculate some rates of return. I know how to use the hp 12c. The others might take me a while. Commissioners just walking through a couple things, you will see in the memo that our returns estimated for the fiscal year end are 3. 7 . So a modest return for a year now with the return environment is going to be much more difficult. Second item any pcs on board. Let by a very seasoned and accomplished general consultant, allen with us today. You will see a good portion of this related to the uncertainty about whats going on in greece and the potential cont agents to ireland and portugal. Rationally speaking in the debt position of those countries is much improved relative to the last 4 years. What i should say that its not the underlying banks that are now owned in the countries but rather that debt is largely owned by the central bank. Its not that we should have another banking crisis in europe, but market settlement is fickle and some important events are going to take place in greece over the next week or so. We should anticipate some considerable volatility for a period of time. Also not in the report is that the Chinese Market is under 40 in less that a month. Very volatile market. It was less than 100 in the prior year. As we have begun to entertain the idea and begun Due Diligence on managers in china is is relief to me to buy at half the price relative to a month ago. But it is something we should anticipate. China is still very much a murky market and we should expect some volatility in that market. It closed at 50 million. It closed shortly the day after the board meeting. We continue to buildout the team and im very excited to announce the hiring hann phan. You will see the credential. She worked for mckenna as cio and are at stanford. She has great pedigree and great experience and you will see her educational accomplishments. And coincidentally if i get this right is hanns sisters daughter goes to school as melissa mass going to school. Bottom line, the world is amazingly small. Im really delighted about hann. We need a lot more alpha out of our portfolio and we are very excited about hanns idea and her capabilities moving forward. We do expect joshua man to join here at the end of the month to assist in the management of our fixed income portfolio. You will see we have additional positions that we are waiting on filling here shortly. You you see the writeup on the update regarding the Hedge Fund Consultant and hedge fund to fund manager. If there is any questions about that i will be glad to answer from the board. Lastly we had a very productive trip. I felt we had a very productive trip. Eunice and bob did go to hong kong and we anticipate Going Forward with private equity and public equity and probably at least one private jet strategy. It was a very its very helpful to go will and visit the region. I will ask the board if they have any questions. Thank you, i wanted to recognize hann, welcome to the team. We appreciate you stepping up. Well have many spirited conversations in the future. Many of them will be long. [ laughter ] we are a passionate thoughtful people. Thank you for joining us. Its good to have you. And to the staff for the Due Diligence in finding her. Congratulations. Lets see, colleagues . Mr. Driscoll . Item 6. I may this sk this to come back next month. You talk about this 5person including consultant, there has been issues about the minutes and the actions we took in the march meeting. The first question is at that time we had a different consultant. We have a new consultant now with experience in this return strategy area. I would ask the board when commissioner is here to pick up the discussion because hes the one who raised the issue back in march whether or not we should allow our current general consultant to participate in the general review. There was a question about participating and im more concerned about cant we find five people to do this work because as i understand this is a large amount of work in this rfp work. To answer your question, commissioner first of all to give the description of the work requirement. We have 21 rfps. I think that to you know an appropriate way to evaluate each of them is to read it once. There is about 150 questions. The average looks like about 100 pages. We have not opened the boxes yet but typically about 100 pages or so. Read it once. Take notes. Read it a second time. Put your notes into writing and come up with an evaluation to do all of that takes 45 hours to do one. In my estimate it takes somewhere between 80 to 100 hours. That is just to read and evaluate the rfps and there is discussion among the five of us. For five of us to share an assessment of each one. Each one probably takes about an hour to go through for five people. Thats another 20 hours. The total all in work is probably between 100120 hours to arrive to narrow the assignment from 21 rfps to these are the 6, 8 or 10 or the number that we should do Due Diligence meaning reference checks and talk to former or current clients talk to managers, onsite Due Diligence, have them come meet with us here. Thats the whole gig of onsite Due Diligence. Each of these five people will participate in some portion of this. We are not going to ask people, myself and allen or whoever the right person is and the person that we hire will do the onsite Due Diligence, we are not going to require that of someone who is not paid. But the other aspects of the Due Diligence, they would. The total autumn all in is at least 150 hours. That gives you a scope. So, to get some outside rs to do this, of course if we have allen as the consultant can we control allens schedule, yeah, we can do that. If we sought a consultant from the outside who is not a consultant from the board, we would have to compensate somebody, thats a meaningful amount of money we would have to pay for that. To get people from the outside, the last two is the last increment of the search and evaluation committee. We have 1 person. Hes really good. His name is shawn billy for the Santa Clara Valley transportation authority. Hes been managing that program now for a number of years. He has a portfolio that is pretty material and hes also a Hedge Fund Manager where he managed my Credit Strategies and he did that for 10 or 15 years. So hes got firsthand experience on what kind of questions staffs and consultants should be asking, what to look for, etc. Sean is really good. We are searching for a fifth. It is a hard assignment for somebody to take. I reached out to a number of cios and mds of very prominent plan who would be a great resource for you. I wish they could do this for you. They would be glad to do it for you in private. The reason why they cant say anything publically is because if they have their own consultant or Hedge Fund Managers how can they possibly recommend you go with somebody else . So there they would be glad to consult with you if the assignment were limited to things like fund to funds and direct. Or the right number of managers or oh pine with you on their evaluation of staff process in utilizing best practices standards in our Due Diligence process. These are really prominent people that you would be really pleased and honored to be associated with and i wish you had them because if i could name their names, you stepped them up in a heartbeat. But they either need to speak with you in private or if its in public, it needs to be limited to those few things and not to rerecommend this consultant or this manager, but more compare and contrast to get the board some things to think about related to fund to funds versus director best practices standards in their assessment of our work and things like that and how to negotiate lower fees. There is a great md of a plan in texas. Hes managed to lower his Management Fee from 1. 5 . I think 2 is the standard. Now the standard is pretty defunct. Thats no longer the case. Plus the hurdle. The hurdle is typically cash or plus a percent. Hes really good and i wish you can nap up these people. The fifth position is unknown at this time . Yes. We have to tell them honestly its undiscoverable. That makes it awkward for people. In terms of the third position, this consultant, if we are not allowed this consultant, that is another consultant we have to pay for. Our current consultant they are already under contract and its part of their contract to do the work and there is discussion about the contractor to do this work. The 150 hours of work for each individual. To bring people into work for us, is at least two solid weeks of work. And the board is going to be making decisions based on this work. So the thorough Due Diligence process takes time and effort. Thats why i wish commissioner was here to talk about this to get the resources of staff to get this done well. Im not sure where we are on this timetable. The timetable propose the last month or 2 months was pulled off the calendar. I vntd vtd have not voted on the calendar yet. Its important to get the staff resources. Are you making a specific recommendation . Im going to but im not going to do it because commissioner make is not here and he maybe opposed to it. He had to leave for some reason. I would like to point out that briefly the board has delegated to staff the authority to conduct rfps. The amendments that were made that commissioner driscoll is referencing to issue the rfp for the hedge fund and some of the ideas that the board wanted to be included in the hedge fund. There is nothing magical about five or four. I have had discussions with director mac about participating in at least the fund to Hedge Fund Manager side of the rfp and we intend to bring back the item that was pulled a couple months ago that commissioner driscoll referencing once we have a sufficient Evaluation Team to present to the board. But i do believe that we do not need the boards approval for that Evaluation Team to begin work. I believe what we are trying do is get the staff person on board and we will proceed as delegated by this board to us to conduct the evaluation of the rfps. Whats happening with the staff person trying to get on board. Where is that in the timeframe . We believe that there is significant progress that has been recently made over the last 3 weeks that we will be able to bring them on realistically in the next month or so. Its not meaning to be approved who has the person. Are you able to make the offer . Not until we have finished the paperwork. Its not sitting anywhere. Who is holding the paperwork . No one is holding the paperwork. Its new work. So it takes time for that to work through the process. In that process of hiring that person, how long has that been to start its been a year. We initially advertised for the Hedge Fund Position in february of 2014. I dont think it was that early, but april. It was over a year. Obviously we couldnt hire anyone until we knew there was a strategy that the board would approve. Its not being held up anywhere. That