>> item number seven report on the performance of retirement funds for the quarter ended march 31, 2015. mr. coker >> thank you very much. >> before we get into the guts of the report, what i would like to convey is that this is the last schedule meeting for -- to service our consultant, though continue for our fund contribution plan. i would like to make special acknowledgment and appreciation to -- in our 20 year tenure as the consultant for our plan. leslie has served with distinction, class, and 6x. we are top quartile performing defined-benefit plan over the

past five, 10, and 20 years. in addition to serve this section classes access, leslie has been very much an extension of staff. she estimated in the erp process that she and hannah spend between 30 and 60% of their time on our account and i am pretty sure it was more than 30. she has truly been an extension of staff, and has answered all of our questions, and partnered together with us very closely. leslie, i just want to say it has been a pleasure to serve living. >> thank you very much. >> i am to say thank you leslie on behalf of the board here. >> i would especially like to commend leslie and angeles for their work and their time and whenever i have asked for materials, or a question on the materials, like they got back to me rapidly. they are a very

detailed. so, i do think it has been a pleasure to work with you and i think other members [inaudible] since i have been on the board. >> commissioner driscoll to ship this a good time to extend thank you before we get down to business, but i hope your successors will appreciate the fact that maybe angela can set the bar for the level source we can meet demanding of her consultant all the time. this last 12+ months has been probably our highest level of demand on her general consultant agrees guest validation process and our new commitment to go into the -- i want to thank you for your work in many partners because i know you write other stuff in your letters as was her quarterly report them very informative and educational so thanks for helping. >> thank you. >> leslie, i will turn it over to you.

>> thank you. i was guessing at the end but just a bottle thank you very much for those comments and taking them every much for this relationship, which is lasted a very long time. two ebbs and flows of market changes in the organization here, and it has always been really a privilege and one that we appreciate during much. really i cooled working together with you it really was a partnership working on this plan and i think the results speak for themselves as being look at their long-term results. so, thank you very much and please note that everyone it angela feels the same. lake rafe over really exceptional run of 20 years, which i think is quite unusual in our business. so, township 4x20, 80 this approximately number 80. so, but, truly thank you very much. the plan ended in march with 20.3 billion in assets. it was a positive return for the quarter of 2.4%. we saw a few things going on in the market. probably the most interesting

of those was that we reversed some really long-standing underperformance by non-us equities relative to us equities. the result markets were up 4.9% in the quarter and that is even after a very big headwind, rising dollar. so, we have seen in capital markets and stock markets really respond to quantitative easing that we have seen out of european and japan. emerging emerging markets also performed american nice although less than development developed markets. growth across the board was better than value. value sectors continue to be held at somewhat by energy exposure and we also saw good performance from small-cap. bonds were the weakest asset class. with a 1.7% return.

that is weakest other than cash of course which is actually an exceptional return given well how well it just rates of a quarterly return of 1.7.'s deadly benefits of having the credit exposure that you have in your portfolio. your country now with somewhat underweight long-duration treasury assets. we really saw a rally during the quarter of already low levels of interest rates. when you put it all together the long-term record, as bill mentioned, the plan is that top quartile fund over three, five, 10, 15 years and with lower volatility than his peers as well, which is quite a strong record. looking back at just the quarter, some other things that were positive were convertibles were actually positive. relative to the us market. convertibles are designed to capture much but not all of the upside of equity

markets to protect on the downside. they have done that. this is the past five, plus years that the market has been pretty much in an upward trajectory so it converts convertibles of unreformed of it but involved of times as we have seen just recently, they did add value. i think the continued role of convertibles something the plan will want to address as a considers overall structure of the equity holdings. -- we saw some good results from active management in international equity. those results, on the negative side of where things are dimension which were value exposure was negative back far behind -- credit exposure and somewhat underweight in duration. [inaudible] of course, that is traditionally backed up since the end of the march quarter. but, the quarter is having an impact. so, i will stop there and certainly take any

questions and thank you once again. >> thank you much from any other discussion? mr. mitre winter >> first let me echo our appreciation to your service that upon direct idealize this performance that you did mention top whatever let us not let the public us equity portfolio as was the international equity portfolio. the 10 years, the usc equity or floyd has underperformed benchmark by 44 basis points. per year, for the last 10 years the international equity portfolio has underperformed benchmark by 46 voices points per year for the last 10 years. just as an example, the number for the tenure number for the international equity is by .29% per year compounded annually whereas the number for the benchmark is by .75% per year compounded annually so i am

able to public securities arenas over the long run, would underperformed the benchmarks it is obviously a better role in the selection of the managers can you just show us what you have learned perhaps as well as an rates going forward in terms of selecting the best performing managers that do outperform their benchmarks and add value to the fund? >> a few things about that. one, is that i think especially in us equities it is incredibly efficient market. particularly for large. it is very hard for managers to add value. it would have to be incredibly discriminating. the doors currently, the large -- where the index fund is the very largest component of us equity exposure that, as we see, the index has somewhat underperformed. not by a lot but somewhat the broad us equity market here so, having their data exposure over that very long -- were talking a 10

year period, you know, on a market structure basis, it has been a bed of a headwind. overall it has been very positive to have passed -- because you had these keeping fees rose. grading core exposure. in asset classes where it is hard to add value, but you know, it is having that big exposure in the index fund is, by definition limit your ability to add excess returns. i think somebody small-cap managers have not done as well as they could have. -- for example historical performance wise. others have done quite well like -- and i think one issue to keep in mind is both the risk exposure, which is by design going to ride in a rising market, which is what we have had and especially in the

five-year period, but even the 10 year period, so that exposure i think has in a sense, >> commissioner set out to do, but there has been a relative return impact due to that reducing that volatility. i think it is very hard to find -- to have a really agile portfolio, when you have eight rfp process that you do here. that i think it makes it a little bit harder to make changes in a timely way. it is not the only reason i think but, it is definitely an impact. those factors are similarly, at play in the international equity portfolio back i will say, most of these managers are doing well vs. their benchmarks ,, and i think if you look at the public equity portfolio as a whole, so not just the segments but as a whole, though shall return to the page

-- public equity as a whole has outperformed. in fact, over all these periods except the one year. so, i think looking at -- i am sorry. that is public markets. public equity as we said is down 30 basis points. there are shorter periods, five and three years. it has outperformed. so, performance is -- it ebbs and flows. i think we have had some more recent success with active management, but it is a challenging market and it is a challenge with how you conduct research buses as well. >> can you just give us some advice going forward in terms of what you have learned in terms of manager selection or give us some kernels of some expertise in your expense over the last 20 years in terms of going for authority managers?

>> i think having somewhat a somewhat nimble search buses would be useful. i think the search buses here takes quite a bit of time and there are going to be some ways to streamline that, but i think you are look at. and, i think that could make a difference. i think the basic structure of the court of past management to provide court exposure in the satellite of more active managers that are very judiciously chosen, really firms that you are getting true excess returns, two of her relatives to the fee per pain, those vendors are frankly very hard to find and you need to be mindful of the search process you use in order to be able to find those managers. often, in our process will not the best way to identify those managers. >> thank you very much. >> thank you. >> mr. driscoll

>> the first question is when asked that information about wellington wellington has been on a watchlist because that started in april that is where there is no number for them. i know angela is leaving but mr. coca can you ask the staff to prepare a number on april 30 >> share >> we will make it 10 years in month but the numbers are how were supposed to evaluate [inaudible] >> question two, commissioner mitre which it does ask for some basic us permission up relative underperformance in the equities pursue the benchmark. when the important things about this kind of paste dissolves into the problem township because our manager performs included township terminated by results are there. so whether not how much that would account for the 46 point underperformance atchison issue. the third point has to do with --. my basic

question is, is there an opportunity cost adding convertibles to the equity portfolio? uncomfortable with that however this is -- individual performance issue. report talks about the employment to our stock ratio based on a being does however i am wondering how this manager is doing relative to peers. there deliberately different from -- but i am wondering about the performance of this particular manager. this is too much consistency of underperformance but from the market. so, this is the wrong period perhaps to answer that question. oakley the june 30 period ending, then asked for more detail just petition pertaining --.

>> will wait till then >> i would tell them but am asking us to be ready for that because of not the way till september for the answer. >> look at the data and please share with any members of the board would like to know to connect this consistency issue here is what i want to ship will be ready. >> thank you. >> any other comments on here >> since we have the performance i want to talk about fema asset management page 37 if your report, i just want the record to reflect just provide some basis, prima was a manager but for -- the last 20 years. paid by -- they issue mortgages directly on commercial real estate. they have just have done a superb job during the

panic of 20 weight. they had virtually zero losses and they were the real estate business. sought a point underperformance for the five-year number. they burned 12.9% per year for the last five years. their benchmark, 4.4% one per year that outperformed white 8.5% per year but last five years as wells for the 10 year number, 7.03% for 4.93%. so last 10 years that outperformed the benchmark light 2.1% per year for the last 10 years. so, on the watchlist, again moving on to page -- the following page, page 37, you have them in red in terms of the watchlist with her out performances 700 basis points. it just seems odd without underperformance that they would even be considered to be on subject to scrutiny if you will. so, if you could comment on performance deeply the performance is accurate that indeed these numbers are accurate for the performance? >> i think than -- numbers are subject to variability because the pricing issues but the

longer-term numbers are more reliable. i would say the benchmarks have literally nothing to do with what prima actually does. is the aggregate of public bonds and major sectors is what that is measuring, which is completely different than >> could you speak of a letter that letter because i am having trouble hearing >> is completely different than what prima does. while using that benchmark? there really is not a good benchmark for what prima does. probably something that might be closer similar -- would be i when i look at that relative to the say a high-yield benchmark, things that have more credit risk are more concentrated. so, the level of outperformance, i think has to be taken a little bit with a grain of salt because of the benchmark in mismatch issue. also, obviously, every manager

deserves scrutiny no matter how great their performances. i think we have observed that, just a little closer monitoring of the portfolio and how it looks relative to guidelines is warranted. >> on the issue benchmark that outperformed all the benchmarks on that page, so since you obviously involved in denmark would you believe a more appropriate benchmark for them? >> i do not mean to say that they are not doing a good job performance wise. i believe they definitely are doing a good job performance wise, but the 700 basis points the perception that has to be tempered by the fact that that is vs. the benchmark that is very unlike >> later >> et al. performed what would you suggest would be more appropriate benchmark? if your suggest is not appropriate. >> i think this benchmark -- i

believe this benchmark is one of the better options we have. it is a good option. but in terms of interpreting, you need to take into account that is quite different from their mandate. we believe performance wise it deftly done a good job. >> you are not suggesting another benchmark? >> not suggesting that >> thank you. >> okay looks like we have exhausted discussion i would ready to for a vote? this is a discussion item. i am sorry. so will take public comment. please if anyone is interested in speaking on item number eight . item number seven? seeing none, public, disclose at this time. is likely to call the next item in a >> item number eight was continued. >>

>> item number nine, discussion item report on performance of the private equity portfolio for the period ended december 31, 2014. mr. coker >> thank you, norm. in our colleagues from quarry cove, are going to give us a walk-through of our private equity >> thank you. welcome back. >> thank you. thanks for having us. >> you can begin when you are ready. >> first off, i apologize for not being here. he would definitely be introducing this item company had family obligations that prevents him from being here. so, i will take over for him and keep it very grateful for turning it over to tori cove and tara king and david banner here to provide greater detail about the performance for the equity program. for year ending december 2014 that is very strong year for the program the

map in many ways. it has been a strong record year, if you will, in terms of distribution, which is always a good thing. also, in capital deployed release capital committed, we hit over $1 million for the year 2014, with new commitments to 25 funds. so that along with distributions, setting records for the year really -- that class into a greater [inaudible] as we continue to grow it trying to reach our newly set allocation of 18%. that was board approved recently, and were currently at 11.2%. so, we are committed greater amounts of capital to greater number of funds, and at

the same time, using record levels of distribution as well. so, with that as a backdrop on to say we continue to have great long-term performance 16.2% -- [inaudible] and the portfolio is 27 years old. at 16.2% is a very strong number. for the year, just looking at 2014, the appreciation for the program, that castro is 13%, so that is also a very strong performance for 2014. you know, the two largest components to the private equity program both mentioned capital and buyout, have produced very strong long-term results. venture capital is 22.5% whereas the buyout portfolio is 14.6% since inception. >> question >> yes >> as i am looking at the page

you are same.-- performances 13.4% >> i was talking since the session inception. >> okay to ship 60.2%. >> 13.4 for 10 years am a 16 since inception. 15.5 for the s&p +500 makati zane the s&p is not 15.5 >> it is 3.5 and the s&p 500 [inaudible] >> just reads strings of. >> okay so just to finish my comments we talked about distribution setting a record of $578 million has returned to san francisco for the year 2014. that is the fifth consecutive year were distributions have outpaced contributions him and then 2014, the net cash inflow in the system was 150 million. at this point i turn it over to -- and david for the comment >> thanks.

>> i like to performance on good gland stole lots might good story there, but i will repeat. hopefully giving you a little more detail here and there and then pass it over to david annie's gave me some perspective on the market. first i want to start by saying that you might read this in the report that we moved 17 of the energy focus funds out of this particular portfolio and put them into the real assets portfolio back so nothing in this report includes any that performance inception to date. during 2014, the portfolio appreciated three and 35 million . only 13% and that compares to 2013 would appreciated porter 21 or 18%. even though the appreciation is down a little bit, year-over-year, you are private equity assets increased relative to total pension assets from 11.1% to

11.2%. keep in mind, the target is 18%. so, we have a ways to go to reach that target. the value increased from 2.1 billion to 2.2 billion at the same time your total pension assets increased from 18.6 billion to 20 billion. the appreciation during the year led to a one-year irr of 16.8% meaning the inception to date ir from 16.1 at the beginning of the year to 16.2%. during the year with every quarter measured, you are total value to connect multiple edges vision to pay in multiple was at 1.6 points and 1.2 times back based on recent page analysis we have completed, we believe you should be emitting around $800 million-$1 billion during 2015 similar to what you did last year. this level of

investing should not be reach her target allocation, with proper diversification across different vintage years. and help offset the recent net distributions that glenn was talking about. i do not know if you note in the report but you have the net cash flow positive since 2010. during 2014 contribution increase by 60% and distributions also increased but only by 24%. bringing you net cash flow positive by one 50 million. we like seen this to be since coming back is the general partners walking in that value that they have created. however, makes it difficult for you to reach your target allocation invariant you get more money back then you are putting into the ground. it happens to be a good time for the general partners to be finding liquidity with valuation seem to be pretty high relative to valuations

throughout history. in addition, the 2008-2009 timeframe found it very challenging the general partners to provide liquidity to you so those of a pent-up need for some equity. you are 26 and 28 vintage years to provide 42% about distribution that occurred in 2014. based on the recent positive cash flows back to you, and the increase in the target, 2014 was a busy year and staff was trying to get you up to your allocation that you guys approved 1.1 billion documents for 25 funds, and closed on nine 25 million commands on 23 funds. this resulted in active commands to to 18 different 18 funds with 99 general partners. that is up from the beginning of their new it commitments of

two 195 funds with 91 gps. it is worth noting here, you are not re-upping with all 99 of the general partners. staff in conjunction with her consultants continually evaluating all the investments to determine which ones are good to re-up with may come to but back to market that in fact, the top 10 relationships, as we measured by total exposure, which is the current fair market value in the unfunded, has accounted for 33% of total exposure generating an irr of 36% with a one-year period and an inception to date irr of 25% with a 1.9 multiple payment so the general partnership strong conviction and really performing well for you. five major strategies have performed well since inception. byars raging from 9.5% to 22.5%. total value multiples from 1.4 21.7 times.

we have outperformed your peer for benchmark in all periods measured except the five-year period, and you are also outperforming your opportunity cost benchmark which is the s&p 500 +500 basis points the longer period of time, the shorter period times have been impacted by these and strong public market performance. we believe overall, your purple is very well diversified with respect to strategy and geography, vintage years. we also note that now you -- with 1.7 of unfunded commitments relative to 1.3 billion at the beginning of the year. which will help you again, as that gets deployed to get to your target. looking ahead, 2015, we have started seeing i net cash flow be out flowed. to

were 300 million so far in 2015 has been called. 200 million has come up for a net $100 million outflow. then, to date, 14 funds have been approved for eight or nine and 15 funds have closed for 710 million. so, great performance that stopped working really hard to try to get you up to your target allocation and asset class performing very well. now, i am in a turn it over to david about the market >> hi david -- let me segue to little bit about carrot talked about. among public and convince you of one of the best private equity programs period. which i do dimension that i live it for you back if you took your dollars invested since inception, and had you just invested in the public