with a separately to discuss the strategies if you have questions. >> i'm sorry in addition you good afternoon commissioners happy new year at cambridge we've worked on the private entity and we'll take today it continually talk about where the system is today in terms of the private program and discuss the outcome in terms of the near term opportunities in 2015 as well as hit some of the market dynamic in the overall private equity market please feel free to be interactive and ask questions during our presentation we have materials in your packet if i can ask you

to turn to page 2 i'll admit some of the highlights on page 2 human resources in terms of performs the performance private equity on a basis has been strong since the - a strong contributor to our overall pool 2014 was a productive year over $900 million from the system just for private equity excluding energy private investment that compares about $340 million from the year prior in terms of number relationships our system added 9 new constrained managers and we under wrote 11 existing relationships definitely in

terms of the the xoifl relationships we're back to the underwriting and through that an evaluation of some we passed on or the system passed on in terms of allocation the private equity system remains under the 16 percent of our equity is if we remove the energy private investments that are anticipated to be transferred to 9 program that actually drops down the private percentage to 11 percentage and there are several reasons for this two of the main be ones that's been a robust of robust market you've got distributions and they've paid our capital calls in the last 5 years but with strong entity and strong

flying public market is that resulted in the determinant of a pool value of close to $20 billion a new peak value the fundraising market we've heard is very, very competitive and the strong managers are typically over prescribed it's been important to get an early get develop the relationships early as well you know be quick in terms of timing and motorcycling with that in terms of the strategies that our team as well as in conjunction with the investment team 59 spurs has been working collaboratively in identifying the right opportunity to target for terms and getting in and making the introduction working all understandably from you know relationships from your staff

and cambridge to help develop those and get those allocations on the investment side it's a very interesting market on the private investment we continue to search for pockets of values and as well as adding to areas where the systems program is relatively light in the explore if i could turn you to page 3 a snapshot of where the program is today here we have some graphs on the bottom and the bottom will show on the left hand the equity program and the right side is excluding your investment the responsibility has been called adopt and paid in by the system

your first investment in 1987 and what it is valued 59 today the green is what has been 12krsh9d back to the system and the imply is what is left in terms of value and help within the managers is so as you can see from the private equity program that one .7 times the dollars you put into the program has generated one directing and 70 a interesting evaluated to one 60 in terms of the performance again strong performance on a absolute and relative basis and on page 4 where since inception 16.6 percent n i r of the 10 year 15.7 periods of time so you know

the longer than term has delivered a healthy premium we've recalculated the premium in our market quantify and it's our cambridge p m e basically nears a public equivalent in and out of our program and investing in the peer s and p 5 hundred since inacceptance and seven hundred and 90 points in the last 10 years you put in what is typically seen as a green bar which is the regular annual average count return rate for the s&p 5 hundred that is a similar story in the 3 and 5 year periods very

strong public market that the private program has trailed but i would say it is hard to keep up with strong public market in the short-term particularly due to the market private market vaegsdz and the permits find but in the last year private equity has been a strong performer in the last year that private equities has up tacked the public market i think you know with the next page we've see here in terms of the venture it's been a strong component of that driver of outperform so i won't spend 7 8, 9 on the chart on page 5 we wanted to provide the information returns and break out and this is through various multi you year periods i noted

earlier your venture investments have delivered strong perform in the last year one of the big drivers within that you have a big position in uber with one of our managers that's really gotten a big lift but over the longshoreman the buy outs - >> (laughter) your buy outs have delivered strongly over the long term and we compare those results here you have the cambridge benchmark in the middle table there and then on the bottom are the public markets returned and by comparison. >> on the next page page 6 we just wanted to showing you the

directing kraeths from each one of the classes for our managers and on the left side is did year the 12 months ooefrj averaging thirty and since the inacceptance as i mentioned venture was strong in the last year and big driver as well as buy outs bear in mind venture is about 25 percent of our portfolio and buy outs are 50 percent that's the strong outperform from venture managers in the prior year period and since the inception the back beauty fund have delivered the most in terms of asset returns the next page is a breakdown of where the program is broke out by each one of the sub asset clauses as well as emerging versus developed markets and the

top is the portfolio including energy and the bottom the portfolio exuding copyrighting and the left-hand side is what's in the ground what has been invested in terms of n e d and the right is the dry or the unfund amount just a few comments as noted in the past emerging markets overall is light we're continuing to visit and build back the venture most of the emerging xhoesh has been in a market opportunity but buy outs are starting you made commitments in 2014 that will add to that and the emerging markets b will continue to grow

and as you can see on the dry 30u6rd does the emerging markets are the ones added into the dry powder are a larger component on the next page on page 8 a chart showing the program historical cash flows from the private equity program and the top half of the chart are our distributions and the bottom the trktsdz and the different colors represent the different classes and the wine chart shows the magnitude of the net flow the positive and negative for the most part the program dipped into nothing else cash flow just after the global financial crisis but over the last 5 years has gone back to positive net

cash flow with a strong cash flows in particular in 2013 so those numbers or so for the first half of the year are that the orange is what repealed by buy outs as you can see in recent years just for examples in 2013, the buy outs sdrksdz out phased the capital calls probably about 3 to one overall the program was 2 to 1 in 2013 in terms of distributions versus capital call we'll see something similar in 2014 with the increase in commitment pates for 2015 probably in the near term going forward we'll see a dip down in terms of the

reduced amount in terms of the casual flow as we see those managers calling down capital. >> please note the only way to increase the size are in the underground portfolio is the blackwood line blowing blow the horizon; right? eyes we're getting more money back and we introduce another going forward. >> on page 9 this is another cut of the program and this is actually going through at a one level deeper and looking at the company level data for your flying fund and breaking it out by the geographics xhoesh and stage exposure a similar story on the u.s. side 3 heavy on under the circumstances west coast this is mainly due to the

go back in the venture explore we have and on sector you know a the larger chunk to technology probably plainly from the venture side as well. >> if there are no questions i'll move to the observations on page 11 hitting on again 2014 the very productive year for the equity programs in terms of commitments over $900 million exuding energy and that is over double the amount that was committed in 2013 in terms of new managers 9 new managers in private equity xhooud energy and 11 re-ups and passing on made strides in terms of adding adding where the program was

light or the value valuations we find are more attractive in terms of concentrating behind the name this is bigger bets this year in backing the managers you have committed to and the average commitment size was around $51 million versus an average of $30 million for the year prior and again, just to reiterate with the higher level of commitments as we want to you know get closer to that target allocation the in increasing the commitments that it is likely that the net cash flow will go down it will be reduced whether it it's hits negative or just up it indicates it will be reduced going forward in terms of passing on page 12

we ran our analysis and updated it recently and came up with an annual target pace of 7 hundred to $800 million for a 16 percent target if that target it increased obviously we'll increase the suggested annual pace as well and several fooshgdz go into getting to that number and why that is increased from an earlier estimate last year we had six to $700 million moving the energy investments to the real program and then also the stronger than expected distribution that has occurred for the program in terms of the number of relationships this is an ongoing discussion and with the

investment team at the system i know you know the general view is the continued concentration of the best names and manage the number of relationships you you know you'll have an inception a total number of one hundred plus manager relationships and probably will 60 are the ones that are ongoing you've continued to back and that's a healthy number but we reason there should be changes as far as continuing to back the higher names and looking at addressing to areas that we have less exposure and take advantage of the manager upgrades at this point i'm going to turn it over to scott who will go to the sub assess clauses. >> thank you implementing the

all the investments have been active in terms of venture ventures is far by far the most active in terms of voluntary lot on paper performance is outstanding i emphasis on paper there seems like a lot of new raise and the businesses are still in their developed we not worried about the class as a whole right now we're worried about the later stage venture we've seen the hedge funds and the stages it's a that's a bad thing the idea of raising accident radius we've been very excited to introduce

the systems for the venture manages their will fantastic about letting us pinch ideas and letting us meet with them the systems is fantastic and new york managers love to be able to say that san francisco thinks their legitimate it's you know kudos to you and use to your advantage we're definitely looking at europe and asia it's there's less capital overhang we need to be selective in - >> can you talk about that. >> growth area is a growth area of equity we've make introductions in that that's a unique market it is also competitive trying to make sure that we're looking at the facts it's segregated we've moved

further upmarket ta and justin and tavrn i can't they're doing more buy outs trying to fourthing who is the break out so ta has i think it's roughly say $4 billion and so their competitive the buy out more than the equity managers i know that this is an area we continue to introduce spurs two i know trying to get ahead of next crumbles you're getting to know the managers u-turn to page 14 our impression of your buy out managers you also continue

to look to see they continue to perform but to date they've done job the focus with the buy out managers trying to see who are the next one and we're filling that avoid small cap we like the value creation is a good deal that's the component of taking million dollars business to a $20 million a higher grocery and selling that business for a higher multiple. >> so there's it data later on but sector focus manager is a focus something we have an idea that shows the sector focus and manager outperform generally i was. >> you've done a great job of

getting more assess and part of it is making sure we're finding the right managers the special situations is a component we've been flexible with and it's a dynamic market a traditional special strategies they're not attractive and it is not a lot of things we've look at the turn around key managers so the deep value manager and this is an example of this platform. >> i'll let audrey talk about this and despite this is in the u.s. it's been a busy time from asia and sing important i've met art a few times now and in hong kong the investment team ta is

active meeting the managers especially in the markets where the opportunity items where the managers view and stayn top of the involvement that's an active involvement with the commitments in the past year to high quality managers we think that builds a strong foundation we're committed to look for the themes and the outcome is the environment and the merging markets going forward we think early stage venture in china more attractive giving the vaegsdz in the late stage but there are positives about the managers that continue to execute well, there we that there are certain themes playing out the raising middle-class and the health care and the potential restructuring given

the slow down with the market particularly china we'll be looking at 9 opportunity but looking at opportunity to be addressed to the current roster you have that will add complimentary emperor and return out of ata's we continue to be hard at work with there's been a commitment made to latino america we think that sets a good foundation for the portfolio and we have listed opportunity to africa we'll continue to be disciplined and make sure we're picking the right managers and not just filling the gap tweezer keeping our i'd say and areas on other gloriously link i'll wrap up in terms of the portfolio we're pleased with the progress we continue to work hard to find pockets of opportunities with

the portfolio. >> so i'll quicken talk about the counter trends there's a lot in here i seem you may have questions i'll try to keep to shorter for you as you mentioned performance is fantastic and strong directs for 2014 has been fantastic 2 to 1 ratio is great the fund the tables that gps are now in control of what we do we're advising clients to be cautious and trying to make sure they're picking the right relationships good news here is that the ftc is getting involved in the early stampedes we view that is a

positive the items we should expect more to come the kind of high-level themes on page 18 of concentration and out sizings the best managers will continue spurs done a job and expect difference indication and geography is critically important and manager selection maneuver you have the definitions of difference indication to outperform long term and co-investments is a popular topic and i'm involved with the current services i would say that there are reaps to do that but most institutions lp are not set up to do that we advise them to building very careful if they think about going doing this the way you set

up your system apologizing alternatives make sense and real estate i know this is being formulated appropriately it is a given the market we're advising again, people to be cautious. >> talking about the fcc talk about 9 limited partners. >> sure so was it means there will be greater transparent for limited partners as well as if there would be less ways for llps to be taken advantage of hidden fees of what you're not paying for . >> i think we're already seeing some of the focus starting to move to a hundred percent offset

of contributions of the monitoring fees just to avoid the scrutiny from the know if focus that's a friendly you know to the llp vandal going forward so again, this is what the ftc spotlight on the equity this will help the terms for the loophole will that. >> i know that the fcc has said they have fees i know i mean, i that haven't seen the list it's confidence as we think about the terms of the ftc pushing on the firms is there sort of a dividing listens between the bigger and smaller firms that can easily comply are they doing some of the things it's not that

big of a change for the firms we partner with. >> i would say that the industry in the community has been discussing those issues for years now it helps when there's a spotlight and help from federal government with a big stick i think their involvement is the only way to buy even faster and reduce the number of exceptions out there i have to say in our portfolio many of the gps are in compliance. >> okay. that was what i was trying to ask thank you. >> yeah. i think we'll go through it we've got quite a few appendix and hit the highlights if this year's questions i'm happy to answer any questions

you may have. only page 19 in the the highlight the proliferate equity continues to deliver strong returned that's a long term asset class we've focus on a 15 year numbers cross the geographies and different strategies it has out performed to the public market this is the private equities driver in the portfolio i'll skip over 20 it is the long term strategy i think we recognize that and in terms of thinking about 2015 as a pipeline and the opportunities you know we've included slides here to that have guided our thoughts in terms of which how that relative evaluation is attractive and hue we should be positioning ourselves going forward in terms of fundraising we're