in the u.s. proefbl possibly from europe as the market continues to develop our hypothesis is that it should do better and the agency inadequate has outperformed in terms of higher and on a multiple basis to wrap up in in terms of of choout so for an page 28 the managers selection and the alternatives is hugely important it's important to start early in terms of building the relationship and the investment team has done an incredible job not only in the u.s but abroad that has resulted in several assess constraint managers disr disbursement is better and

that's why due diligence comes in and the risk management and due diligence but that being said we set a relative evacuates that helps guide us in terms of leading strategies we look at the capital on hand and the evaluations in the market and the drivers we looked at it with the classes as you can see on page 29 not a whole bunch of strategies on a compelling side of the 12rur78 so we'll see it's really a function of the market environmentalist the vaethsz have picked up we'll continue to be disciplined and work harder to find different types of ideas things that make sense for that the portfolio. >> if i may i'd like to acknowledge the great work that's fwp done by each and

every member of the private equity team always the the colleagues much has been accomplished and there's $4340 million and from 50 to $60 million additional more relationships on the way the cautionary words about competition and evaluation but much has been done so every on the team. >> the board supports as well. >> on page 24 the huge differences between 5 periods of time and the next 20 percent down and the smaller funding if you look at the lense $100 million it is 49 periods of time return and 20 percent down

is a difference of 29 percent that's humane and from that the chart it shows the larger fund you have the less performances you have. >> and the loss as is that because this us you can the sector specialist tend to be the fund. >> in a smaller fund one rome home rounding run could swing the result before a multi million dollars fund. >> that's the results. >> yeah. so you know the prospective team said we have to deliver one hundred percent in the i r r >> you know just what it tells me when i look at you know your large cap u.s. managers not private the difference between the top talent is one percent

not much difference but here putting the focus on private equity have you to be in the one hundred percent per actually that's a huge difference go job. >> i think i'll start on page 8 the blackwood line dropped we want less money come back to hit our target, however, this goes to liquidity the cash available not just to make the call the question is about liquidity going forward especially, if we're going to increase the liquidity the pates based on up to 850 maybe a billion dollars. >> that's a question as we

carefully and thoroughly think about i believe i'm comfortable with the discussion i know i'm comfortable with the discussed we've had about 18 percent to private equity aid real assets board should keep in mind a do you have an opinion of things on the path to get through one has to do with the ramp up in expenses in the meantime the returns come latter in the elementary it's less comfortable in terms of returned ruptures right now the liquidity of both files is quite good we can school bus some measure of the

liquidity but we do need to consider where we are in terms of evaluations in the public market we could have a relatively high determinant and if this falls with the large investments it looks at 12 percent can quicken balloon i can see is we're comfortable taking some additional liquidity is that helpful. >> ongoing it's helpful but then at least you're aware trars a problem they financing cash is going to stop so how much liquidity in the portfolio do we need to retain we were caught short several years ago so i want to bring up the liquidity issue now. >> on page 8 the worse case

scenario is o-8 in the financial prides the bases were shut down that draw down was about $250 million will less than $300 million for and against we can cut a check for if not today tomorrow the worse case scenario in the historical of our it could grow i guarantee you'll not see that in the future for the 20 plus billion dollars fund but we have the liquidity the questions about liquidity. >> today we have likely it it could change. >> meaning iowa could you mean by changes autumn the real assets energy this is a large change and the cash flow with

the partners is great that's cash but cash not ending in a decimal. >> they use a lot of leverage; right? they just refinest smart interesting half of those they couldn't sell to take advantage of low interest rate. >> we're focusing from here infrastructure and raising real estate they are the liquid assets do we want more approve equities where do we go to get the best returned. >> it is an issue of like it page 24 i want to make sure i read 24 correctly as i understand what's represented in the bars besides the green and

yellow that means we have good manager selection in the upper two columns is that true i don't know if so this dollars or management. >> page 24. >> this is just a broad market. >> this is not san francisco and it's not. >> to answer our question yes that's true most of our partners. >> it is not only related by the due diligence process for investments and operation is some indication of our staff and impounded some are no longer with us those previous jaksdz of cambridge and mr. schwartz and other people the manager location. >> process is key to the staff they've done fairly well. okay. better than average that's key

to many manager sleksdz page 28 i want to make sure i read this those are propose returned >> those are the tanldz it is the medium and top bar we're looking at the medium to the 25th. >> it's interesting to note i read that in the foot not all the numbers are gross except for that the hedge funds so when you go apples to apples we have to be careful to compare increase statement about obvious people not president to invest in the risky assets those returned s are equal to equities that's an interesting chart but it shows certain areas don't get into the risk fund it is adorable.

>> the twho two bar charts to the far right the u.s. p be e and venture those returns. >> i was focusing to the public versus the private in the hedge funds area maybe someone will ask about it going forward i'll stop thank you. >> i have no questions on an obligation obviously this is one of our strongest performances over a long period of time you have any support in areas of real value within the field. >> i want to thank you all for coming. >> it's great we have spur

numbers let me go through the numbers page 7 buy outs are half of the portfolio i want to focus on interest rates a little bit i think that eventually interest rates are going to stro have to rise in terms of the performances of buy outs a lot of those are leverage that's helped the performance does it not, and, secondly, going forward couldn't interest rates rise slowly or fast how does that effect the returned going forward. >> for the buy outs and the financial crisis and i think we have the program has benefited you've gotten the dividends we rapid with the interest rates rising or the consider tingling

we obviously as audrey was 30i9 in terms of relative evaluations we find that the large cap buy outs it extensive we're not seeing that as a pocket of the opportunity we prefer to look at the funds within the buy out the smaller fund are not able to let them as much and also reindirect equity he can are not as leveraged realignment with the buy outs it's key to finding those with great operating expertise and that can an ad additional value beyond. >> so a couple of issues on page 7 the special situations that would be the vulture below the debt rate and gusts an idea of the categories in the special

situations. >> traditionally it was argued with partnerships upstairs are the strategies but our private energy have been removed and contributes to the assets so really it will be special situations that reconstruction strategies going forward maybe it up ethnic. >> when we address investment will into the portfolio we are targeting around the 15 percent round rate of return. >> yeah. yeah. on the debt side are you trying to get a lower number and the debt component of the portfolio. >> i agree and because of that assumes we're not take into account lower rates of return we're not make the commitments when in absent of wide sdrets

we're trying to test the sdrets with regards to the steams that's hard to do but we're looking at the distressed debt. >> let me ask bill let's say you want to target a higher risk component but not have the higher targeted return for the private portfolio will it go something else. >> pardon. >> eunice and bob have 4r507k9d on the credit side. >> we have an opportunity for the fixed income it's been quite active. >> we should put that on the table that private equities on the equities side is different than the debt side i want to go to the tapes that's a big issue some of the commissioners mentioned that on page 12 you talked about your

commitment between 7 having and $800 million to target the private equities let me ask you this. let's target this how much would a commitment let's say $800 million what's it for $18 million. >> approximately a billion dollars the model the phasing model preponderance of the evidence the allocation they've made preliminary passes at it, of course, we wait the boards decision my rough estimate about a billion dollars. >> it's a challenge it's a moving target so i want to have a round number. >> thank you. >> co-investments how many have we done tell me how many

co-investments in san francisco. >> we have no direct co-investment. >> that's what you thought we talk about it all the time by congress; right? i'll say the advantage in the direct is the fees are lower generally speaking because the terrorizing interest it is not part of it i want to talk about the benefits we're getting towards the end of the meeting we talk about liquidity but paying attention to the benefits that's the bottom line so i just want to put that open the table that's the need for liquidity and the anothers we have stocks and bonds, etc. and long term investment we need - that will do it oh, can you did that overhang i think it's not committed it's investing >> okay. thank you very much. >> anyone else? opening it up

for public comment on item 7 known i'll close public comment thank you very much call item 8. >> uber who did it since you brought that up. >> we invested in uber okay. >> item 8 chief executive officers report. >> oh yes thank you and commissioners, if we turn to memo after investment returned a couple of things to note in terms of deals that have been approved by the board in closed session in recent months, that have now have 92 now since closed first, the c i m their

opportunistic real estate diesels except for the last one so c i m was approved by the board last month is that skwem excuse me. no october that closed and k s l approved in november that closed just a couple of weeks ago and chris was approved in november closed shortly before christmas as did the second workers steel and x two was approved by the board close a week later and american securities partners that was handed to you the reason for that is that this it deal closed after we published the board packet before the meeting that was approved by the board last month and closed a few days ago

are there any questions if not, maybe. >> quick note beginning on page 3 as i included what i envisioned being a once a year calendar review of the market it discussed the returned in the equity market a division between 9 greater than returns in the equity market while the international market was the down the bond market had a 6 percent return in the u.s. bond market overseas has done parolee fortunately, we have no exposure to develop market bopped we're confidence as a sectional last year bond story as a merging market bond market as those bonds develop there's a lot of

charters and information this is new i thought i'll broadly ask if there's questions on the material than if this is well received we'll do this on an annual basis >> one question oppose page 3 s&p return of 13.7 and roughly 3 thousand had the 6 on the finally the u.s. equity of the component on the pension was 11.5 won those numbers are comparable in the same timeframe. >> it was performed by one percent important the fiscal year and in march angeles will be giving a complete. >> calendar year. >> yeah. calendar year. >> other questions not a

question only a commitment comment. >> the executes and the capital the 13wrshg9 address we if have the public here it was a chance for the members to look at how much we invested it's a good address to the c i o report. >> commissioner you asked and we'll have it included. >> i ask that for the other members. >> any other questions. >> what about the commodities you said poor how poor. >> negative i believe single digit negative i don't have the number in front of me there is one chart you kind of alluded to if i can find it here real quick i believe it's at last one just

after page 9 the chart after page 9 you see what has think outside the box done well and what has struggled in the last few years a tough market in the commodities market. >> i have any public comment on this no one we'll close it call item number 9. >> thank you you have the monthly report it reflects at the close of 2014 the mrrnts held $207 billion in asset and 4 hundred and 4 did participant were k3wr0r78d and 6 hundred and

62 enrolled in gold maker that's pretty good those programmed were implemented in the middle of the year we wanted to tell you we've announced the interest rate for the first quarter of 2015 is 1.22 percent a little bit which had a bump from last quarter that was 4.18 periods of time we're moving in the right direction that's effective through march authenticating we wanted to report there's a change in the target date small cap fund that happened n this month and we were noifrtd the fund is moving from 6 external managers to one manager it's q martin luthern king jr.'s a guess for the krunl as a result of that change angela have felt advisor is here to talk about a

search and we'll be bringing before the different compensation committee in marriage a possible recommendations for changes and last i wanted to report there was issues with respect to the annual required distribution we were notified thirty mrrnt received sdrksdz in excessive of what was required they've been notified it they'll be required to return the fund so they can avoid tax preliminaries we've asked prudently to 4r50shg9 this and plan what happened so it didn't happen again and had let united states knows about any issues they had or concerns or concerns from the participant. >> is this over 70 you have to

take. >> if you're over 70 and one-half you have to take money out. >> that's the federal government requires those participant to take some money out. >> and the cats they didn't take it out and we understand it that so only a minimum district courts and apparently thirty of our participants received more than what of the required it's quite a lot of money. >> it is taxable. >> yeah. they don't want it out. >> yes. it is. >> i i know taxes very well i get a. >> in my evident we're working

with proouvenl. >> how do i find out about it. >> proounl. >> i'll ask for. claire item number 9 >> i've also been interested in that thank you mr. makras i was debating we had some of the information distributed this morning at your r.c. f f meeting and i think that mr. collins mentioned an over distribution they'll be contacted and members we're happy to hear that one of the concerned i read american people article about proounl

with 09 organizations or agencies that participate in stocks and bonds and direct evidence compensation and one of the champions was proounl was known for actually he setting up circumstances that put more of the profit button in their pockets and less into deferred programs they sponsor and i know it might be an accusation from one scombroufrt but when we are looking at who are the deferred managers would be there's some concern about the fact that there would be losses and be some things anticipated in the very beginning with a transition i had part of the conversation with mr. collins over this fact many that members were concerned by the about the trashth it

seems like there's been unnecessary fluctuation that impacted our members i'm wondering 80 basically, if we can look to the future for meantime we change managers we giving that great krths and try to have a less negative impact because of for a year or two and they recover have enough it's not what could have happened if other managers were which one thank you for the opportunity to speak. >> any other speakers on public comment thank you very much for the report. >> call item 10 please.

if no one else - carr oil will accept the report as summit i'm on up for comments from staff. >> i have a question this is a supplemental there's two conditions for the supplemental the fund earners more than the actual rate of return and it refunded prop c was involved in that second requirement it be totally refunded the second requirement would it be rue refunded how does that effect the system if indeed that hurdle is not met