casciato present. cohen is expected. driscoll present. quorum is present. >> president stansbury: great, we're going to be going into closed session, but before that, why don't we call for public comment. is there any members of the public that would like this address the commission? seeing none, we will go into closed session. anyone who doesn't need to be here, would you please leave the room. >> ok, we're coming back into open session. is there a motion not to disclose? there is a motion. there is a second. can we -- discussion? can we take it without objection? great, item passes. mr. secretary, next item.

>> general public comment. >> president stansbury: for general public comment, just for clarity for the public, you have the oornity to comment on anything not already agendaized for the board. if you want to comment on hedge funds and they're on the agenda, it wouldn't be appropriate to comment here, but under the specific item. that being said, is there anyone who would like to talk to the board under general public comment? >> good afternoon, rrcaa. just to explain the little green sheets that i left for you. we apologize that our annual installation and luncheon is on the same day as your board meetings, which why we changed our meetings to go at 10. if any of you are able to stop

by just to say hello to our members, we would be most grateful. we realize you wouldn't stay for lunch, but we have to send out the invitations anyway. >> president stansbury: thank you. i have a speaker card for you for general public comment. >> so i sent an e-mail on this comment which is that i would like to suggest that you add two 1-page reports to the monthly report on the strategic asset allocation and investment risks. allocation, i sent a table. here's the table. right now, you have 60% in equities. in september of last year, you had 62-63, so you're down 2-3%.

your strategic asset allocation has 49%, that's 11% lower. and the adjusd mix that was proposed by the cio had 56%. so you're still 4% above that. and that was the one that had the 42% funded status. so there is a huge amount of changes going on in this strategic asset allocation and it's really hard to keep track of all the moving parts. so i think that a summary table of those moving parts with a brief description should be provided once a quarter, along with the investment risk report. regarding the investment risk report, alan ber nell is leaving on the 29th. this is a huge opportunity to bring in someone with -- >> 30 seconds.

>> -- financial market savvy and global economic savvy who can put together and see or hopefully foresee the next financial economic down turn and crisis. nobody in sfers sta h that capability right now. >> president stansbury: thank you, any other members of the public that would like to address the commission? seeing none, we close general public comment. next item. >> 5, approval of the minutes of the april 11, 2018, retirement board meeting. >> president stansbury: why don't we call for a general public comment. are there any members of the public that want to address the commission regarding the minutes? seeing none, we close the comment. there is a motion, a board. any discussion on the item? commissioner driscoll? >> commissioner driscoll: board

members may want to consider to amend that motion to the minutes approved if they're edited. sometimes it takes a moment. the two points i would like to see added to the minutes is that it would have been item 7 under the minutes. which related to the department strategy, in the area of divesting from fossil fuels. at the 40-minute mark of the meeting, mr. coaker said there was no other strategy in the marketplace like this one in the sense that the low fee, low tracking, reconstituted index using robust data. subsequent to that and i could not find what mark, he also answered a question of commissioner cohen saying this was the only strategy. i think the minutes should reflect and capture that word, only.

it's a very material statement based on the way this hiring was done. so i think that word is a fact. that is true. what that word means, i do not know what it means, because i do not believe it's true. i'm working on that and will try to confirm whether that statement is true or not. as a material issue, based on how this firm manager was hired and funded. so, i wish i could get the sense. i would give the report to mr. nickens, a point where they can look for the phrase to amend the minutes to capture that. part two, the end of the minutes, i understand the secretary tries to capture long discussions into one or two sentences. phrase reflecting that this proposal, goldman sachs, this proposal was presented to the board.

minutes are a reflection of what happened as opposed to rediscussion. i did not consider anything goldman sachs to us was a proposal to hire and fund them. >> president stansbury: do you want to speak to that, or do you want an opportunity to take a look at what was said to amend the minutes? >> i believe this is a discussion, we'll add the two comments, direct quotes that commissioner driscoll requests as long as the maker of the motion, the seconder is amenable to us making those changes. >> president stansbury: do you want to -- >> i don't think it's appropriate to have a discussion, but certainly we can reflect the -- have the minutes reflect the two statements he's requesting. >> president stansbury: there is two options, one we get the minutes cleaned up, and bring it back next month so we're all on the same page, two, we could just approve it and hope we

capture what is correctly. i would prefer to push it to next month so everyone can see it. are you amenable? ok. great. so if you could go back and take a look at what was said and try to capture the essence of commissioner driscoll was talking about. great. next item. >> item 6, action item, approval of the minutes of the april 262018 special retirement board meeting. >> president stansbury: any members of the public that would like to address the minutes from the april retirement board meeting? seeing none, we will close general public discussion. any comments amongst the board?

there is a motion, there is a second. any discussion? take this item without objection? great, item passes. next item, ple >> item 7, the consent calendar. >> actually, first of all, i want to note and ask the passing of dr. tal image is impacting us in the retirement applications and also the h.r. medicals. >> we have been able to find doctors with the same qualificatio qualifications, so it has not impacted us. it was a surprise, but nothing was delayed. >> i was very smoked at his

pass -- shocked at his passing. i would ask that we adjourn in his memory today. number two, in looking at these -- is this the same thing about the summaries that we have in the investmtcalendar. i'd like to see and ask that if we could do in the matter of the applications, some of them are very clear, but if we could put the name, department, years of service and a clear distinction whether they're industrial or ordinary disabilities, i would just say to those who have the packet, you can look at the second retirement, which is 002 at the end, in the header. it's an application for disability retirement. it does not state whether it's ordinary or service. then it's only in factual findings, number one, is it mentioned? and in the actual order, the

application for disability and retirement is granted, but it's not -- it doesn't make a distinction whether it's industrial or ordinary. so i think it would be -- if we d ep them consistent up there, with the applicant name, that would help. and the only other thing i would ask, at some point in time, it would be really good to have a chart that shows the flow or how an application both industrial service or ordinary flows through the system. so that we can -- the reason i say that, there is one application in the packet today where it fell out for about a year, because of a name issue. and we weren't tracking it, so we had to bring it back. and i thi that would be important to have a flow chart showing how these things move and where they're at, just to prevent things. with that, i would move to adopt

the consent calendar. >> commissioner, the suggestions yog, w c provide a flow chart, but that's simple and we'd be happy to do that. you're asking us to change the way the hearing officers draft their decisions and we don't really have control over that. i mean, the information that you're requesting is actually in there, but there is no particular format. it would be difficult for us to go to the judges and ask them t have aifferent format. we can certainly try, but i can't make any guarantees that the judges would comply and we don't really have any ability to do that. >> i think if just fill in the box, checking at the top, that's what i'm talking about. is that at the top, which is applicant name, name,

department, years of service, industrial or disability or ordinary. because here on this one, it says ordinary disability retirement which is clear. the one behind it doesn't say it until in the packet inhe statement of facts and doesn't even reference it in the finding at the end. >> commissioner paskin-jordan: i understand, we can ask they be more specific in the captions. we can certainly ask. >> president stansbury: if not, can we just get a stamp? >> cross referenced. >> president stansbury: ce just get a rubber stamp and stamp it copy for the board, industrial, something like that? >> commissioner paskin-jordan: sure. thank you. >> president stansbury: any other comments? discussion on the consent calendar? great. i lost track. public comment. any members of the public that would like to address the commission on the consent calendar? seeing none, we'll close public

comment. is there a motion? what is that? there is a motion, a second. y discussion on the item? can we take this item without objection? great, item passes, next item. >> item 8, discussion item, the investment committee report, commissioner driscoll? >> commissioner driscoll: five items that were related t planning. strategic plans for executing the asset allocation decision that we made late last year. this was only part one, so if you missed the meeting you're going to get part two possibly on june 20th. we may have to reschedule that meeting because there has been significant staff change. but you'll get advance notice on that. again, we talked to staff,

meaning managing director public equities, the senior iestment officer, senior investment officer or liquid edit. but again, going back to the total asset allocation and the general plan that thecio, discussed their expectations what they're trying to do, focusing on the key issues of a very good total return, a very good risk adjusted rate of return, as well as focusing on trying to minimize significant drawdowns, which means very large losses that do effect the contribution rate as well as the total funded status, funded ratio of the pension fund. i think we had very good audio on it, we did not videotape that meeting, so you missed it and want to catch up with the documents, is there are basically five working documents, plans, in the next

four or five to cpete the package. includes the whole risk management plan that will tie everything back together. it took staff many, many weeks to prepare that to again show us basic plans like we've been hearing for real estate and private equity for all the other asset classes, how they see their ability to plan the work flow to achieve the asset allocation mix, if the board adopted, which is our first major risk management tool that we use. so that meeting lasted just over two hours. a lot of words. some good graphs. we're going to review it. not every year, but again, it's the plan for executing the asset allocation mix. the board decided on about eight months ago, a tri-annual event. >> president stansbury: thank you. why don't we call for general public comment for the

investment committee report? any members of the public that would like to address the report? >> i thought it was a great meeting. i will reiterate what i said, there a tremendous amount of moving parts going on, you're moving billions of dollars right now and trying to do it in a way that you're trying to balance two things at the same time, which is your long-term strategic asset allocation and also using that strategic asset allocation to de-risk the portfolio. it's a very difficult task to do. i'm not longer going to suggest these risk mitigation strategies because you're not going to do it. but repeat my earlier suggestion, create a table that shows all of the major asset classes and show where you are now compared to the strategic asset allocation, the adjusted

mix and where you were in september of 2017, when you passed it. if you do that, your equities are 60%. in 2017, they were 63%, so you're down 3%. in the strategic asset allocation, you're 11% above that right now. so there is a glide path and you have to balance the two things, which is you want to maintain all of these key fund manager relationships on the one hand, but you want to de-risk the portfolio on the other hand. so very, very difficult thing to do. bill has said in the meeting on the questioning from commissioner driscoll that some aspect of tactical decision making there, which i'm gd you have he said. you have that difficult balance. i think that table should be in a report once a quarter

explaining all the moving parts, because you're moving billions of dollars around very quickly. and you're changing managers quickly and it's hard to keep track of them all. >> president stansbury: thank you. are there any other members of the public that would like to address the commission regarding the investment committee report? seeing none, we close public comment. any discussion from the board? great, next item. item 9, discussion item, chief investment officer report, mr. coaker. >> start by looking at the second page, if you look to the column titled, allocation, alloc, i want draw the progress we've made. you see private equity right now is 16.5. that was under 12, slightly under 12 four years ago. so even in a bull market, we've come a long ways there.

the next is that liquid -- well, let's take private debt. only 1.8%, but i'm going to come back to that because we made $600 million worth of commitments that are waiting to go called. when it does, that will be over 4%. the next progress is in real assets. that's at 14.2. that number was slightly under 9 four years ago. so we've come a long way there. and absolute return, that's 9.6, and that number has been built from the ground up, in the past year and a half. we've come a long ways, what is still to be completed is the remaining build-out of 5% in absolute return. i think we're going to be more than halfway of that 5 in about year end. private credit, we've talked to you, that's going to take time. that could take five years. that's cambridge's estimate.

it really is dependent on capital being called. that number will be taken primarily from liquid credit, which right now we're overweight by 5%. so there is a lateral move from liquid creto private credit and we've talked about the tradeoff of less liquidity for much higher yield and much higher expected return. and then private equity, the remaining 1.5 and 3%, to get to policy targets, that's really now -- we've made the commitments, i'm going to point to the lower left here in a moment. that remaining almost 5% between the two, that will come from public equity when capital is called. so, another thing that i want to let you know is in the lower left. and you see that in private equity, in real assets combined, we have about $5 billion. in commitments that we've made,

that will be called over time. that number was a little less than $2 billion four plus years ago. so we've made the commitments. we're now waiting for capital to be called by our business partners. i wanted to give that summary on asset allocation. the next i want to turn to is the narrative document. called memorandum. basically our return year to date. we had another fine month, up almost 0.4%. year to date, up 9.6. on a fiscal year to date basis, most everything is working. you'll see that public equity, both u.s. and international, are up more than 10%. as are private equity and real assets are also up more than

10%. bonds have struggled. we are down slightly in our bl fixed income market. the worst asset class to date so far this year is the 10-year treasury. down about 3% or so. turning onto economic conditions, the next several pages, there is 11 metrics here indicating that economic conditions are quite solid. we have a 91st straight month of job growth. you see when unemployment now, at very, very low levels of 3.9%. usually economic theory would say that when unemployment is this low, you have a major uptick in inflation and we haven't seen that. and i think the powerful forces of globalization and technology are the reasons why. corporate profits you'll see in the c have been very strong. there is a number of metrics at the bottom of page 3 that

indicate that there is a lot of data to suggest that the economy is in a nice strike zone. in the lower left on page 4, ere is a lot of talk about valuations and how high they are. according to j.p. morgan here, the forward looking ratio is 16.4. the "wall street journal" today says it's 17.1. that is high, but not terribly high. i point to one number here that is high on this chart. it's in the table on the lower left. that is the schiller pe ratio of 32.8 is high. i would point to three things about that. one, it is based on the normalization over 10-year earnings period. we had an earnings catastrophe in 2008 and 2009. and there is two important sectors within that schiller ratio, that we were in earnings

depression and that is energy and financials that combined well over 20 -- a little over 20%. you see on the right side, based on where valuations are, if you were to do regression analysis, our forward-looking five-year returns would be about 7.5-8%. next real estate. i want to give you a word picture about how expensive san francisco real estate is. it's more than nine times median priced home is more than nine times median price home income. so rivalling hong kong, excuse me, hong kong is easily the most expensive market in the world. it has a high population and super, super small in terms of geographical space, and san

francisco as well. next, you need to get some closing items out of the way. benjamin fuchs asset management, we asked for $125 million, the board approved. we received $100 million. bgh, we asked for $50 million, we received $45 million in australian dollars. sbcvc, we asked for $25 million and we did receive $25 million. on the right side of page 7, you see the absolute return numbers. doing fine. you see again the bond market has really struggled since the inception of this program. we have reduced our bond exposure from 20% down to whatever the number was, it's really quite low. personnel. two big positives and one sad piece of news. andrew collins joined us as

director of esg, we introduced him to the board a few weeks ago. andrew has nine plus years experience in the esg space, most recently at state street and with the accounting standards board, we welcome bo williamson, he has more than 12 years of private equity experience, we're thrilled to have both them join the team. >> are they here in the audience? >> they are, we did introduce them, but you weren't here. andrew? do you want them to speak. bo to our left and andrew to your right. bo, andrew? act one, scene one, take two.

>> i'm bo williamson joined last week, working with art and cynthia. i was with the private equity funds group. >> welcome. >> thank you. >> andrew? >> nice to meet you, andrew collins, delighted to have joined as the director of esg. coming from global advisors, where i was esg strategist working with institutional clients around the world. prior to that was in a research role with sustainability accounting standards board, a nonprofit based here in san francisco that works between

corporates and investors on better data and disclosure. delighted to be here and look forward to working with you. >> president stansbury: thank you, andrew, bo. >> we're sad so say that ellen is leaving sfers. she has been the directing manager of asset allocation, risk and innovative solutions. this is decision from a mix of a couple of things. second to last born daughter is leaving, graduated right now and heading off to college in england to join her sister, who is already there. and that, plus how housing prices, she and her husband have decided to relocate to the midwest to trade lower housing prices and much larger land in exchange for cold weather. [laughter] >> much colder. >> we have an open recruitment for an analyst for private debt

and have begun recruitment for ellen's replacement. we have the investment committee that is scheduled for june 20th. we're in conversation with commissioner driscoll, with staff travel, you recall that the meeting has been moved around a couple of times, staff has travel scheduled for june 20. we'll see, but we'll let you know well in advance. >> president stansbury: questions from the board? >> commisoner driscoll: it's more of a request/observation, than anything else. to continfund -- that's part of plan. please stand by. please stand please stand by. please stand

>> that's just a suggestion to show your thought process.

>> we did not carry this out to look for positive data. >> i have a question about private debt. when do we expect to be at our allocation? >> five years. >> and our allocation% is ten? >> yes. >> how long until we get to that four% that you talked about? >> it depends on when the capitocapital is called. we do have some charts showing expected pacing. i would need to go back and look at the charts. i know the endpoint of when we get to ten, i don't know. i don't recall when we get to four. if i were to estimate, a year.

>> have we, or have you talked about -- the funds that we put money with, there are prior funds. they already have names that they are invested in. t posing a estion, does it make sense to have some of our existing managers sort of create a trust or a site car so we can buy names in the secondary, if they fit certain criteria? so that we don't have to weighed a cycle to get in, or is a purposeful that we are trying to invest over the next five years? >> we are trying to take a measured approach for a couple of reasons. one is we don't want to take a lump-sum of vintage year risk. we want to spread that over a time series. the second reason why we are doing this, is this is a hot

space right now. a lot of capital is flowing out andlarge commitments are being made to private capital, private debt. people are looking for a place for good yield. there is a lotof thohtfulness about the ramp up. about not being -- not going in too hard or too fast at a time where a lot of people are crowding into the space as well. i'm thrilled with the quality of the investments that we've made. this is performing really, really well. we are below double-digit returns, if you recall, last week in the presentation. but it is a hot space and i have some concerns about that. it does look like there is still a lot of capital that the space can still absorb. but i also want to see it.

>> alan martinallen martin, anyn this? >> i agree with phil's comments that it is a hot space. other people are discovering the attractiveness. others move their allocation from private debt from 10-20 and they are a 40 billion-dollar company. last week, that was the number 1 area that they talked about in terms of the opportunity to earn extraordinary returns in what is otherwise not an attractive market. i think bill is right. there are a lot of people coming into this space. i think that the amount of money that is still dislocated from the financial crisis is substantial. there is an ability to, eight, i am still very constructive about moving into that space. we should be careful. i am probably more optimistic than he which the pace -- and -- at which the pace we could do

it. you certainly don't want to be overly hazed because a number of managers that are very... those are not the ones you want to deal with. you want to do with the folks you have been through a cycle and know how to do it but it is a relatively new space. bottom line, you are right to adopt the allocation. bill is right to be cautious. i think we should push that part and i would expect to be doing more meetings with staff on ideas we have to help do that. president stansbury, we are not slowing this down, and i am not slowing this down. this has alwaenybe the expectation that to do this thoughtfully, add to spread the risk over a time series and overt managers coming to market, is to do this and five years. we could do it in two or three. we would just be a lot more

lumpy in terms of, you know, fewer managers. there'd be much larger allocations. we've been making commitments of 50, 75, 100. we are still planning to bring a couple of investments of four or $500 million. that has been slow going. there are not too many shops that can do that. we just haven't settled on one yet. >> okay. i do have some current issues. i understand the rationale. i think that there is a way to maybe go a little bit faster in this space without compromising quality. i feel like we've been talking about private debt for a while and i understand was made some commitments, but i would like to revisit this to see if there is,

you know, a way to may be move a little bit more expeditiously of what the board can give to you or what we need to do if it all makes sense. >> commissioner, i'm glad we are talking about this, because there is a great deal on this. i do think that it will be a very valuable resource. he has a really deep credit backbone. we have come a long ways. we are not in the eighth or ninth inning of making a large allocation to somebody like a gs oh, or carlisle. we are not in the eighth or ninth inning but we are no longer in the first, second or third either. >> i mean, i think it something worth exploring, talking to our partners about the ability to create a separate trust or a

car. may be we are willing to pick up, you know, a block of it. i'm not saying bring back a recommendation to the board, i'm saying, please discuss it or think about it yoursel yourselff it makes sense, and then we can talk about it again. if it doesn't make sense, it doesn't make sense. >> we will pursue that. there are assets that european banks continue to need to trim o get off their balance sheet requirements.r regulatory it is a large -- the largest shops that i mentioned that are absorbing those. investments that we have made so far have been more niche and specialist strategies where we have higher expected returns. some of the shops that i just mentioned, we expect more pedestrian returns. still, much better than a liquid credit. but not for the returns that we've gotten so far in the space. we will look at this. i do think again that we are further along with making one

large allocation. were not in the eighth or ninth inning. were no longer in the first, second or third. >> thank you very much. >> anymore comments or discussion from the board? ok. did i call public comment? >> no. >> any members of the public that would like to address the commission on this item? >> commissioner driscoll hit the nail on the head. bill is cherry picking another without knowing he is doing it. on the valuation, it is meaningless without the context of earnings. the 12 month earnings are 132. they are forecast to be 174 and december of 2019. that's a 32% increase. unless he explains how in a three percentage economy, they

expect earnings to increase 32% between now and december 2019, it's a meaningless number. to show you how meaningless it was... the market declined 55% from that day on. it's totally meaningless. this unemployment number is totally meaningless. he says it is the lowest at 50 years. the fact of the matter is, prime working age male population 25% to 54% is less thaneth ratio of the population employed right now than it was in the eighties and nineties. it's a meaningless number. people are dropping out of the workforce. the most disconcerting thing he said was about the asset allocation. the simple fact is, it right now the equity is 60%. simple fact 43.7, in public and

63% in private. it is 49% for those two. you are 11% above it, ok? don't pretend you are there when you are not there. i'm not saying you can get there overnight. bill is an upside guy. that's great. nine out of ten years that's great. you have to hire a chief risk officer who understands the downside. allen wasn't it and he's not going to find it in the normal pools that he fishes in. >> time. thank you. are there any other members of the public that would like to address the commission? seeing then we will close public comment. next item, please. >> item ten is a discussion it item.

>> good afternoon commissioners and welcome. i'd like us to go through the monthly activity review report that is before you. just a brief refresher, on the first page, you can see our current assets. we have about 3.4 billion with the plan. moving on to t next page, you can see benchmark performance of our investments, currently. on page 3, we have some participation rate information, as well as employee information as well, that includes a number of folks that are currently contributing, on the number of folks who are retired or terminated. we have approximately 30,000, or 40,000, 38,000, actually, participants in the plan at the moment. moving on to slide four, it shows a stable value crediting rate. we report out on this because

the stable value fund is nearly a third of our assets. and so we decided to report on the crediting rate on a quarterly basis. moving on to slide five,we have our total plan allocation. this is how participants are allocating their investments across the asset classes. and slide six shows the actual demographics from an age standpoint. you can see that they are. finally, on slide seven, as you know, we have rolled outthe loan program in august of 2016. it has been over a year and the loan policy states that participants can take a second loan after a 12 month waiting period. so since then, we have seen a little bit of an uptake in the loan program. that concludes the monthly activity report. i'd like to ask the commission if they have any questions. >> any questions from the board? mr driscoll? >> the credentials help. please start adding the number of participants in the target

date funds, not just the goal makers. you can make it the aggregate. >> right. so the participant assets on the targeted funds and to the accounts are provided with bold maker -- are provided that the gold maker assets are not separated out. is that the request? >> i say that -- i see the gold maker number, but that does not include the target funds. >> that's correct. >> there is a similarity in that product. i just want to see if those funds, how much of the participants are using them. >> the targeted funds or the gold making funds? >> the targeted funds. they obviously want us to see that number. >> understood. absolutely.

commissioners, i also have a brief update for you on our third party administration r.f.p. as you know, we recently released it in mid april. that was last month. i'm happy report that everything has been completed and posted, and received on time. we have received a total of four builds. they're all from major players in the state. i wo ke to ask council that can say who the bidders are. i can't say who the bidders are? ok. ok. so one of them is obviously incumbent but that is good news. we will be doing the scoring anticipate presenting three summit finalists to the deferred compensation committee for interviews on july 25th, that will be a long meeting. and post review the rfps will be available for inspection on-site in the event any of the commissioners would like to see them. we anticipate a formal recommendation to the board in n

august or september depending on any additional due diligence and site visits and reference checks to the recommender. and i think that concludes my report. >> don't be surprised if it is four and not just three. don't be surprised if it is just two, ok? >> when you talk about finalists? >> semifinalists going to the committee. >> the administrative staff is here. just a question of information for service to the members, i had a member call me yesterday who said i'm going to go see a financial advisor. do you think i have all the information on the website for my benefits and is there some --

sufficient information on our investments on the deferred website? and i think -- and what -- thi person has been around for a while so he referred to the blue book. remember the bluebook? i'm just going to ask you, did you think, that on our website there is sufficient information that they can just download it and take them go look when they go to see their financial advisor or whoeverey are dealing with? that there is no reason for them to call and ask for anything else? >> i believe that there is more dled formation on the current website once you've logged in to see your account, and then you have to go elsewhere to find a performance -- the performance numbers. i remember the bluebook, but i believe that there is a greater access to more letters of detail on investments that you've made, and where you hold your money

than was available. >> and all svivor benefits are broken down by classes? like, categories? tier one, you tear two, heere three? >> that's the benefit plan. rather than thef comp plan, now i believe, certainly with the secure member or sole, even your financial advisor, if you carry your passport cannot model away the benefits estimates and have a much better idea of what your pension would look like five years from now, three years from now, and so that i think it is a powerful tool that has been out there for two or three years. on the deferred comp side, every vendor that we've engaged, obviously had different websites that i believe, i don't think we are receiving complaints. i think what i heard is

sometimes it's difficult to find them. you have to go to different places on the website, but certainly i think the information is there. >> well,, i know that the basic website that's ave bl the public has been redesigned last ear. we'vereceived a lot of compliments on that. it's a lot easier to navigate and user-friendly. once a participant at logs in, they have access to all of the information a financial advisor would look for including investment information and allocation information. so it depends on what the financial advisor is looking for. generally they want a whole picture and so they would possibly get everything they need with regards to deferred compensation. i don't know what that financial advisor would need. it's part of his... >> so the statement is that everything is on the website, and if you trust your financial advisor you can give them your password and they can then look at your individual account? >> certainly if you share your

password, you can have them login to the deferred comp account. if you share your password, they can n to the secure member portal and see how, what elements we used to calculate benefits and protect them, and the only thing that is missing is the social security part. but they can get that part somewhere else. but i believe, today, at i don't know what kind of financial advisor necessarily, but i believe all of the information that a financial advisor would need is available. at a personal level, if you are willing to share your password. >> the only thing i didn't have was my shirt password. i think you get a lot of information, so i am looking at the information that is on the website and then if you have a problem call. >> if the financial advisor needs to know where you have your money allocated now, you

only see that ones you've gotten into your own account. it's not public knowledge as to where dianne has her money invested. she shares that with us today. [laughter] but it is not public. >> thank you. that clears it up. >> let me tell you, you don't have to give your password to provide that information. if it is a licensed financial advisor, they will know if you give them your account, which is within 24 hours. we do daily valuations. the third party administrator approved it and they are required to do that. they are contracted. they manage none of our money or the participant's money. zero. when you bring your accountant with the five digit code, for every one of those, even with unit pricing, they can open up and see every single stock you own, and how much of it you own and then you can put that with all the other stocks and bonds

or saving accounts you might have. a good financial planner will want to look at all of those pieces. it is a benefit issue and there are no stocks there that are attributed to members. it is set up that way to be done that way for that very reason you are asking about. tell your concerns member to download that with the five digit, five letter code to the advisor, and they can look up every single thing. >> quarterly statements are also available. >> you can look up everything. >> print it out. >> even the mutual fund. every single one has it. >> just print it out. >> may i ask a question? there's a recent article that referred to...

do you know the article i'm talking about? >> right. >> they referred to credentials, annuity, offers. for the record, are there any annuities being offered to our participants three credentials in a deferred comp program? >> there are no annuities that are actively promoted through the deferred comp program. the assets that are in the deferred comp plan are located in a trust. the trust is not an annuity and it is not invested in an annuity. in the event a participant needs to leave the plan as a result of termination, or retirement, they have the option to take their money, and invested in anything that they want. that includes an annuity. we have worked with credentials and any vendor to ensure they are not promoting annuities to our clients directly, but they can answer questions in the event of paicipant -- a participant is interested in an annuity product. we do not invest in an actual

annuity. >> typically at the tax-sheltered annuity that is made. even though, all of us who have money in the plan, are participated in a tax-sheltered annuity. that is a labelling problem that people don't understand sometimes with misinformation from other people. when you go to the distribution phase, you want to take your money out. it's an incredibly flexible way of doing it. little bits, all of it, one option you have, i want to buy an annuity with some of my money. you can do that. you can call the third party administrator, and ask them and they will give you a whole range of annuities that you can buy depending on the company you want, what type you want to, that what the value is in the monthly income. the credential can put those in it but they will give you the whole shopping list, just like you can look at 20,000 mutual funds that we have and you can look at a couple hundred itieannu and which one you want to pick. less than one% of our

distributions are taken out in an annuity. less than one%. i want to say is less than one tenth of a% of it periodically would you look and see where the money is going. the numbers i have seen are like three people. >> once it goes into annuity it leaves our plan. >> so with that article, you haven't quoted it wrong what people have said in that article? >> the article was e-mailed to the whole board by an individual. any media articles from this point forward will be e-mailed directly to this board. keep an eye out for many e-mails from norm which may have these stories. the article option said that the plan was simple -- synthetic. is there anything synthetic about these mutual funds? >> you know, i cannot -- i cannot know what he is thinking. i don't know what he means by synthetic. sit --

>> synthetic options? >> synthetic options. so within our stable value product, there are underlying investments. within those investments, there are contracts that can be considered synthetic. that has nothing to do with the allegations or the comments, sorry, that this report are is providing. >> on the third point he made, he said it is unaudited. this is something that we've talked about before. i think, just for the sake of putting this about sometimeer the next year, maybe a brief memo about the pros and cons, the realities, the costs, of what it would mean to audit this. this is something that i get asked about on a weekly basis. and to the extent that there is a papal is a paper dealing with some of these things. it would be great to share that with participants because what they hear is unaudited, i'm

trackable, untraceable and that scares them. to just have, to be reassured that the spoken word is not always sort of satisfying to them, but to maybe have something in writing at some point would be helpful. >> so it is a questn about transparency. is that the main thing? >> i think that is the argument that is made. no one really knows who owns a securities, where they are, what is it bears. anyway, i bring that up a something we can take up down the line. but since we are talking about it. >> we are all familiar with the article. one of the changes we made recently, the board voted on it, and one of our largest equity funds, we changed it from eight standard mutual fund to a collective investment trust. we got to the fee is down, which means the members kept the money by 50%.

that reporter is saying it is an unregulated group. that's not true. the group that regulates the mutual funds is one group. the group that regulates collective investment trus is under the department treasury. they regulate the same rules, same laws, sameenforment authorit if you don't do your homework, you will miss that. why is that done? when staff made that recommendation, that was one of the requirements to make sure that security issue was not changing. again, another incorrect piece of information floated down to the members. all of those mutual funds are regulated. there is no mysterious manager. those funds and that mutual funds are managed by the exact same manager. we used this pricing scale to make transfers easier but it is the same performance level. your money is being managed by the exact same manager. not some shadow or some parallel or some twin.

>> i think the issue we have here is sometimes, if we don't get information, it is true for many things in life. and they just believe what someone else says or has. so please, let's try to deal with that sometime this year and put something in writing, maybe a fact sheet or whatever we think is good. >> perhaps we can happen is we can send the issues to committee and go and look at why it can't be issued, to address those issues. >> that would be great. >> to their credit, there at retirement council and also the staff that works with dianne, they love to get those phone calls. they left to go talk one on one with the participant city employees, whatever they want to call them. they left a talk with people exactly and sets the facts straight. [please standby for captioner switch]