Coalition. Cambridge arranged that and the meeting did take place so forming the coalition and believe the goal is to expand it to include trustees of potentially across the u. S. Who are interested in the issue so we can act in concert thank you fl clarification. That is very substantive. One last expansion, the board adopted level 2 for social policies, in a words engagement so that is why this is relevant working with other entities such as other public Pension Funds that have the staff and resources particularly cal pers and cal stirs that have the staff set aside. I that is a way we can pull our resources and vote our shares because that is a issue regarding engagement to pull our shares with other public Pension Funds and other entities with like goal squz aim tooz try to enact a constructive policy going forward. Those i believe are the substantive issues, any other colleagues on the board who are member thofz committee to share that would be very constructive at well. If not that concludes my comments. Thank you very much, commissioner. Seeing there is no further discussion, this is just a discussion item, lets take Public Comment. Thank you commissioners [inaudible] as i have been actually looking at a lot of the election issues i note there is a great effort with regard to educating the public on solar power as a alternative and would like to sedge the board, when you do look at either rehabbing or building your own buildings as we have been requesting all along we have a City Office Building that is owned by the retirement system also housing my other favorite department, the Health Service system that you consider making a Solar Building that is not unlike the puc building they took over up on golden gate. You make it one that reflects the Environmental Concerns and also perhaps be completely solar power. I think it would save the city a lot of money and reflective of ow position and encourage other city departments to do the same. Just a session, suggestion, thank you. Any other members that would like it speak . Seeing none Public Comment is closed item 7, action item approval the recommend finalist for [inaudible] mr. Board members last december the board approved the issuance of a rfp for core fixed income. We received 61 products for 61 rfps and we have a recommendation to complete Due Diligence on 6 and i will ask bob and unis as well as alan and dan from nepc to give the board further information. Thank you bill. San francisco received 42 firms for 61 products of which 2 firms and 2 products were eliminated. Former Senior Investment office dick picket security analyst mark culmin who focused on the organization of the prorosales poal and by our former investor consultant [inaudible] as a result of the recent change in the consultant we decided to delay the schedule to give a opportunity to discuss a proposed finalist with the new consultant [inaudible] our recommendation is include 3 incumbent managers. The [inaudible] include [inaudible] i also note baird is the manager for deferred comp and [inaudible] for the Government Credit product and [inaudible] for their core product. If the board approvers our recommendation staff will conduct onsite due dilliance on all projects. I requested the [inaudible] for those products they have not conducted Due Diligence on. At this time we are here to answer questions the board may have. Commissioner paskin jordan. I noticed that double line was xed out and want to understand, is that the length of time of their track regard . It wasnt due to the length of time in the track record, it is just it was more voltile than we were looking for. We included 3 more conservative products because that is what we felt was best. [inaudible] any other discussions . Mr. Disical driscoll i have a question to alan martin. Question to alan martin. One of the things we discovered about nfpc and your manager selectionyou have your own short list in every area. Is there anything in the short list with this piece of the fixed income that isnt on this list of 5 . The short list has for each strategy 15 or 20s names so there are names on that list that are not here. The other side of that is 5 of the 6 managers are indeed with respect to the manager on our recommended list. They are on it, okay, good. Thank you. Is there a way that we can see your 15 on that list . Yes. Okay. Commissioner stansbury. Thank you. Within the world of core plus, the managerswhat is the spread of performance . I assume it isnt as wide as a hedge funds or alternatives. How tite is the spread in the [inaudible] managers. Very deminilous. Say for example the spread between [inaudible] might be about 1 percent, where in ooust equity it is somewhat larger than that and u. S. Small cap it is maybe in the 3 or 4 percent range. Hedge funds is a little larger, more like 4 to 5 percent and the point where you get double digit spreads is vercher capital. I was looking at how you break out the percentage ratings for different categories like fees and experience and style and i thought fees was really small percentage of the overall weighting of the scoring. In a category where there isnt a big spread between the top core [inaudible] and the average fund, can you explain to me why it is scored that way . One reason would be is the fees are not large where as, for a hedge funds they can be 1. 3 or 20 and some Venture Capital is 2 and a half or 25. We are talking less than 50 basis point or 20 basis points, sometimes less than that in the consistency of managers over time do you tend to see managers in the top quore tile or move around the medium median . In Public Markets there is very little persistence of performance and managers year to year particularly in equity. In private market there is persistence. If you take a 5 year history of managers and rent them by return and see what they did in the subsequent 5 years and repeat that the correlation is all most zero so it is very difficult to pick public managers in public space. I would think in regards to performance with the plus managers it is dependent how much they allocate today the component. How much they allocate today high yield and bank loans [inaudible] at times it can be much more voltile so we were look toog include more conservative manager jz the fees are on the last page of the staff memo and you will note a couple of the proposals are on the lower end. That is really low. That is surprising. It is very competitive. In closing, you obviously think there is a benefit to having active manager in this space. The persistence of performance ifthe correlation tends to be really low, fees are small, there isnt a big spread. Why active . Why not passive . I do have thoughts on that. Particularly where the bond market is now, i dont want to cast to the bond market as a whole. I think the bond market is difficult to turn decent return. The index return now is 2 or 2 and a half percent so dont want to cast our return to the index. Second, there are good teams in this space and credit analysis can add value here, where ford has one stock or 40 or 50 bond and all have different [inaudible] and stipulations so do think good credit analysis can add value. It wont add a lot because the volatility of bondsthere isnt enough significant pricing variability to take advantage of but think it can add value. I would agree, we looked at the attribution especially at the security selection and the ability to pick good corporate products so woo were looking for more conservative product tooz the mix and their performance and looking at the attribution analysis is why we included these managers into the mix. They are active but good rep. Joe atkins least according to their track record of investing [inaudible] thank you, anymore discussion . Commissioner driscoll. The weights in the first round 25 percent, i call it 50 quality and 50 percent quantity. I go to pages 28 and 29 of the pc report, the information ratio number, i understand the lack of persistence in the public sector, by my question is what do we look for . Look frg the [inaudible] excess returnsi look at the information ratio and we pay for the risk but there is a spread there. I want guidance. I know you cant tell us who you will recommend, but what are we look frg and hope to achieve . That is a good question. We are very comfortable with the managers we added to the mix and i would note the 2 [inaudible] are on review so well explore the reason we put them on the review further. With regards to what we are looking for as far aswell look to consider the more conservative products a. Fixed Income Portfolio has a ton of exposure which includes managers [inaudible] oak tree for high yield and [inaudible] gmo and [inaudible] therefore, well look for more core like managers but also consider the incumbence as well and look at their attribution analysis. Can i add a couple points on there . Credit exposure is wrun, we have a ton in our bond portfolio. Less evident things, one is liquidity management. The bond market isnt as liquid as it was say 5 or 10 years ago so knowing the liquidity profile, those would be a couple additional things. When you come tupe the final recommendation ill fell you what im looking at. Every time i learn something new. Your attribute analysis of the managericize the best fit for us in terms of what we need and how much they criblt thood the excess return from the sector [inaudible] duration and credit. Im look for you to prove that we need that is what they got. Fair enough . Thank you. Commissioner meiberger. Thank you very much. A few questions on thelet me go through staffs recommendation in order is probably the best way to do that. On page 4 of 8, we talk about Aberdeen Asset management, item number tworks you say the assets managed by the income team in philadelphia have decline over time due to Significant Team turn over. Were they put on a watch list for that Significant Team turn over . Aberdeen has been on review multiple times for team turn over, further in the paragraph when [inaudible] announced the intention to retire. I would have to look at the detailed under review memoes from 2007 forward to give more information at this time whether they have been under review. What i can say is that of the entire aberdeen, this is aberdeen opposed to the rdo puffers product, every [inaudible] on the team, when we retained them is now longer with the firm. Im very much concerned whether or not this manager has been on the watch list. Stone harbor on page 5, on your point number 6, you say this more aggressive orientation is significant under performance in 2008 when return td a negative 13. 1 percent net of fees versus 2. 4 percent universal index. [inaudible] that is 1550 basis points. Further, on the following page you say the tracking error for stone harbor, 350 basis points, so you take 1550 divided by 350 this is 4 and a half standard deviations. This is once in a thousand years. In terms of this is a very very big deal. The criteria im looking on the maximum allocation below Investment Grade, 50 percent. That is unacceptable to me. That is absolutely, totally unacceptable and let me give a couple reasons. 4 and a half standard deviations, no. That says it doesnt work. It vichiates you belief that returns are distributed. Number 2, we are talking about protection against the portfolio in the bare market. The funding which is the basis for the hedge fund. The worst thing you can have in your portfolio is stock and [inaudible] this will add to the complication of the funding if we hire a manager and let them have this degree of junk bonds below Investment Grade bonds. Let me be clear, if i see this allocation i will vote against it. It vichiates the premise oof protecting against the down side and having this amount of junk bonds. Why dont you comment on my thoughts. I agree and that is something that was approved in the guideline jz when we visit them on site well discuss that further with the firm about pulling back how much they are able to [inaudible] that is a concern and noted that and something well discuss with the manager. Let me follow up, if the performance is based on that it totally weakens the analysis. Obviously if you have junk bond which is a higher yield to maturity you expect a higher rate of return accept for the severe market which herds the funding and employer contribution. When you take this with the cold brutem fact the best way to prevent and protect your portfolio on this kind of downside is to have long term treasuries. This is the reason why you have long term treasuries, deflation, protection and fixed income component. Not only does it hurt the performance, it has the potential to increase employer contribution squz hurt the fund when you need it the most, it will give away the best protection in a severe bare market. The answer that well deal with it in the guidelines is gruatuitous because the perfornlance is based on what they can and cannot do. What i suggest in your analysis is find out xcktly what is their allocation to junk bonds. I knroe there is a maximum allocation in the migs but im concerned in acuality what was their percent in junk bonds. Over the long run you is added value, but you is bear bare rr market that this will go against the protection of long Term Government bond which is a best anchor and add to it by having junk baunld. Going forward i suggest that happen. Also regarding the chief Investment Officer about the bond market less liquid, i dont see that in treasury. The credit is less liquid but the treasuries are the most liquid investment. Would you agree with that . It goes against had the issue that you have so many strikes gens you. Treasury ares are the anchor. What percent in the aggregate bond index is the bench mark for this are below Investment Grade bonds . What percent of the bench mark are below Investment Grade bonds . The agdoesnt have low invesment grade if yoi have up to 50 percent it isnt a valid bench mark. What you see on page 7 was what was submitted in their response to San Francisco. Tell me what percent is in the bench mark that they are using . What percent are junk bonds . I say about 10 percent, it is less than 15. I would like a solid number because it is relate today the funding of this plan i would add that is why we included 3 more conservative products. This is why we are [inaudible] look for more conservative strategies and have better downside experience than our bond portfolio had in the past. The bond portfolio lost 15 and a half percent in la. We dont want to incur that again in a duff difficult market. I dont think returns are [inaudible] to give a example of stone harbors experience, the roll out in volatility in oct08, it shz happen every the negative 38 percent, know the volatility of the stock market in octoberalso to show just how worried the world was in terms of a total Global Financial clamss is the blow out in bond yields or bond volatility in 08 if returns were normally distributed, it should happen once in the history of the universe. Fortunately the world survived and stone harbor had the best perform ins in 09. That said, we know the riskyness of this portfolio and have written a nice recovery in high yield and want to trim that back. I appreciate that point but when you talk tracking, oorkt phrase tr tracking era is a standard of deviation. The fact that you lost the liquidity of treasuries because you had these credit issues, you gave up the entire ability to take your very liquid treasuries and inves in Everything Else that is going to hell in a hand basket. If you ride it out, fine, but you must understand because you dont have very liquid treasuries you give up the opportunities of invescing in Everything Else going to hell in a hand basical. It isnt just ride tg out which wie have done and can do, it is the opportunities that you give away by giving up liquidity. We can also talk about the securities Lending Campaign and the fact the cash account was frowzen and how much we gave up on that which we havent corrected yet. This could happen again, which is a reason we should hold a treasury portfolio to make sure we have the liquidity to pay benefits and not have tosell the wrong thing at the wrong time. Your point that [inaudible] that is the traditional role of a fixed Income Portfolio and it is the ultimate negative correlated asset. On the long side of the curve. We historically i have liked exposure to long term treasuries. The worry now is their yields are so low, so hat that is a factor we need to take into consideration but your message about the volatility reducing long term treasury is well taken lets find out what the managers have held ipjunk and high yuld bond. I do want to emphasis, what you are showing is the guidelines but in acuality is another story. Should we go ahead with this and come up with the managers i think we need to restrict the amount of junk bonds. Thank you for your comments. I would like to point out the summary is proposal and what their propose to be guidelines to clarify these are not guidelines in place. I will say given your recommendation it is balanced in terms of the [inaudible] i agree you should have a balance of conservative versus the other managers and i know all these firms and say they are great recommendations. Thank you very much. Let rr take Public Comment. Any member like to speak on this item . Seeing none Public Comment is closed at this time. Um, we do need a motion to approve. Is there a motion i move that we accept staffs recommendations thank you commissioner stance stance bury. All in favor aye . Opposed . The motion passes. Mr. Clerk can you call the next item item 9, chief Investment Officers report. Commissioners just a couple brief comment. I do want to point out one thing onit is titled page 2 of the Asset Allocation and if you look