oh, turn it this way? oh, okay. so it needs -- i can just raise it up. i'm -- i'm responding specifically to the memorandum that was sent out last week regarding the predicted effect of the city tax on cannibas businesses. oh, that's fine. i can just move it. on cannibas businesses. the memo did not contain references or specifically link to the data which it cites. so mainly this claimed that a percent of this tax could be absorbed by the consumer and this was asserted by the claim that the gross revenues have increased by 25% in the last year. and ignoring the fact that we just transitioned to recreation

and so that 25% increase actually could be due to the number of purchases. the study goes on to say that some amount of this could be due to increase in price. however, we have had not seen any data to substantiate this. we'd like to advocate a data-driven strategy to best serve both the city of san francisco and the emerging cannibas industry. if we represent the san francisco tax revenue by the multiplication of the tax with the price at which the good is sold and the number of purchases, -- >> supervisor cohen: thank you, i'm sorry but your time is up and maybe finish your last sentence. >> sure. my point is that demand is very high in dispensaries and lines are very long. so please go to the dispensaries. but the availability of legal

goods is very, very low. >> supervisor cohen: thank you. >> thank you. >> presiden.>> supervisor cohent speaker. >> good morning, supervisors and my name is kenneth michael cohen and i'd like to thank you for the progress that you have made on this issue, including the amendments that you have offered. i'd just like to say that the taxes are killing me. i am a low-income retired person and using medical cannibas and the taxes are killing me now already and i am just wondering how i'm going to be able to afford it with even additional taxes coming up soon with the gross receipts tax. i would ask you for parity in the cannibas industry with the gross receipts tax with other -- with other types of businesses in san francisco with what they're paying. and not simply to have a higher tax on cannibas simply because

it's cannibas. thank you. >> supervisor cohen: thank you. next speaker, please. >> sfgov-tv could i have the overhead, please. hello president cohen, supervisor fewer and supervisor stefani. thank you again for hearing this issue. i'm appreciative from the bottom of my heart for all of the progress that we've made on this issue involving tax. delaying the implementation gives us a chance to have a data-driven conversation and i'm dubious that the board of supervisors would ever choose to lower a tax. i don't know if that's going to happen or not so that's frightening for me. but for the interest of the public and everybody watching at home i'd like it talk about i.r.s. code 280e. this code denies the deduction for any expense in a business trafficking in a controlled substance. what this effectively means is that cannibas businesses can't write off their rent and electricity and they can't write off their employee cost.

when you can't deduct those things you go from about 21% to a 49% tax rate. so that's just a broad conversation of what we're already facing at the federal level. and, believe me, if i could go to washington, d.c., and i had the funds and they wanted to listen to me about this i'd talk to them but i don't think they would. so you guys, thank you for listening to me. and then so that's the federal tax burden that we're under and we face state excise taxs and we'll pay our payroll taxes and then we're now facing a gross receipts tax. and we're facing a gross receipts tax that is four to 50 times the rate of other businesseses and i really feel that the cannibas industry will be -- will have an additional tax but i would like that tax to feel fair to the industry. and i think that a double tax of the current payroll would be very fair. industry-wide that's kind of

where we've all landed and we like the idea of a double tax. but the four x to the 50x, when you look at the data it's just frightening. okay. >> supervisor cohen: thank you. next speaker. >> hello, supervisors, thank you for listening to our comments. i appreciate you. and the headway that you've already made, pushing it off really helps the equity applicants. i'm a equity partner and i hope to work on equity program in its early stages from a business standpoint. and just from a patient standpoint and an activist i want to remind you guys that alcohol and cigarettes kill people every day. cannibas doesn't kill people and there is no death toll for cannibas so there should be no death toll on cannibas because

there's no death toll from can bass. so a lot of the reasons that we tax or have extra taxes on these industries is because they are, you know, they kill people and they're problematic. whereas this is the opposite, and we heal patients. i know personally of hundreds of patients that have been healed by cannibas through cancer, autism, child leukemia, a number of different diseases that modern medicine haven't been able to help with. and then also if we want to bring in manufacturers and have distribution in san francisco, i mean, we won't be competitive if the tax is too high with other places which will force the retailer to look outside of san francisco which will squeeze out any taxes from manufacturing and distribution and so on and so forth. because of the real estate in general and how expensive it is to either find real estate, pay for real estate and do business in san francisco. and so if there is a tax i would

say that it should go directly to the equity incubator program or something to help the equity applicants continue to flourish because there will be that tax so if the tax is put into a program to to help it could counter. >> supervisor cohen: thank you, next speaker, please. >> good morning, supervisors. jim lazarus, the san francisco chamber of commerce and i appreciate the amendments made and what is pending before you today. i think that a deferral of any tax collections is the right thing to do. we have to go back to gross receipts generally and the ordinance from 2012 needs to be amended. you have heard me say we have a tale of a payroll tax next year of .5% and we base this on $410 million of business taxes in 2007 -- pardon me, 2011 and it's now $800 million of business taxes collected. based on that payroll growth. so you're getting a combination

of gross receipts and payroll tax that t continues. our problem is with any disparaging rates that target businesses individually rather than as a whole. our problem with these rates is that as we found around the state of california that they're not collecting the revenue because high rates are continuing an underground cannibas economy. and we need to get tax rates correct and we need to do that in conformity with the industry that you're trying to regulate. so we think that it's a step in the right direction. we believe that the rates should be closer to the rates paid of any retail, any wholesale, any manufacturerring, and that this industry shouldn't be unfairly targeted. thank you very much. >> supervisor cohen: thank you, next speaker. >> you know, this is an example of the board being underminded by statements like this. i made several demonstrations

pertaining to taxes of twitter and five other high-tech companies. i have demonstrated where twitter has gotten free money pertaining to payroll taxes at a minimum of $217 billion. and this is a false narrative where you do not collect payroll taxes that you create jobs and that you making revenue for the city. twitter and other high-tech companies is laughing at you. everybody is paying payroll taxes but them. the whole city employees are paying payroll taxes except them. so that's a false narrative. and again as far as taxing the cannibas and everything that is concerned, how come these type of rules and regulations is not being applied to twitter? you need to audit your tax business with twitter and i've already demonstrated a graph there earlier this week on taxes. it's showing that payroll taxes

has trickled down on the graph and not creating revenue for the city. and i want to add to you off topic here that i had a demonstration last night before the police commission pertaining to sexual assault and when you get time i would like you to check out that demonstration. my main issue was to catch the rapist in these cold case files and not just get a bunch of rules and regulations to administrate the treatment of the victims which is good too. but i want to catch the rapists who are floating in the city and county of san francisco and throughout the jurisdiction of the bay area. >> well, cigarettes are taxed heavily and alcohol is taxed heavily and so should marijuana be and, frankly, alcohol is not taxed enough. also, unfortunately, the legalization of marijuana

appears to have encouraged market diversification with growers in mexico and turning to poppies and pharmaceuticals and turning towards mass manufacturer of opioids. so i had hope that the legalization of marijuana might push out prozac and valium but it doesn't look like that happened. so i -- also san francisco has an interest in the lawsuit against pharmaceutical and i hope and assume that you do. >> supervisor cohen: any other members of the public that would like to speak on this item? all right, seeing none, public comment is closed. all right, colleagues, there's a couple actions that we need to take. first i'd like to make a motion to accept the amendment removing the 2020 tax implementation date. may i -- yes, all right, seconded by supervisor fewer. and i can take that without

objection. thank you. and i'd like to make a motion to duplicate the file and i'll take that without objection. thank you. and i'd like to amend the new file with the wayfair amendment, okay, without objection, thank you. and then, colleagues, i don't know if you have any questions or comments before we take our final vote? supervisor stefani or fewer? >> we are required to continue this item to the next meeting. >> supervisor cohen: i will make a motion to continue to july 26th so we can continue the conversation. okay. all right, well, then i'll make a motion to continue one week to july 26th so we can continue the discussion. >> clerk: would you like to consider both files? >> supervisor cohen: yes, continue both files and i'll take that without objection. thank you. madam clerk, any other business before us.

>> clerk: no further business. >> supervisor cohen: okay, ladies and gentlemen, we are adjourned. thank you. (♪) >> third thursdays at the commons is a monthly event series to really activate krisk

centkrisk -- civic center, fulton mall, and other locations through social operation. >> in 2016, an initiative called the civic center progress initiative was launched, it was launched by a bunch of city agencies and community partners, so they really had to figure out how to program these places on a more frequent basis. i'm with the civic center community benefit district, and i'm program manager for the civic center commons. also, third thursdays will have music. that was really important in the planning of these events. >> we wanted to have an artist that appeals to a wide range of tastes. >> i'm the venue manager. good

music, good music systems, and real bands with guitar players and drummers. >> we turned uc center and fulton street into a place where people want to be to meet, to laugh, and it's just an amazing place to be. there's a number of different exhibits. there's food, wine, cocktails, and the idea, again, is to give people an opportunity to enjoy what really is, you know, one of the great civic faces in america. when you look from the polk street steps, and you look all the way down the plaza, down market street, daniel burns' design, this was meant to be this way. it's really special. >> the city approached us off the grid to provide food and

beverages at the event as kind of the core anchor to encourage people who leave a reason to stay. >> it's really vibrant. it's really great, just people walking around having a good time. >> this formula is great food, interesting music, and then, we wanted to have something a little more, so we partnered with noise pop, and they brought in some really fun games. we have skeeball, we also have roller skating lessons, and we've got a roller skating rink. >> if you're a passion jail skeeball player like me, and you're deciding whether you're just going to roll the ball up the middle or take a bank shot. >> our goal is to come out and

have fun with their neighbors, but our goal is to really see in the comments that it's a place where people want to hold their own public event. >> i think this is a perfect example of all these people working together. everybody's kind of come together to provide this support and services that they can to activate this area. >> there's no one agency or organization that really can make this space come alive on its own, and it's really through the collective will, not just of the public sector, but both the public and our business partnerships, our nonprofits partnerships, you know, neighborhood activists. >> i really like it. it's, like, a great way to get people to find out about local things, cuisine, like, it's really

great. >> it's a really good environment, really welcoming. like, we're having a great time. >> we want to inspire other people to do this, just using a part of the plaza, and it's also a good way to introduce people if they're having a large scale event or small scale event, we'll direct you to the right people at the commons so you can get your event planned. >> being a san francisco based company, it was really important to connect and engage with san franciscans. >> how great is it to come out from city hall and enjoy great music, and be able to enjoy a comtail, maybe throw a bocci ball or skee ball. i find third thursdays to be really

reinrig rat reinriggating for me. >> whether you're in the city hall or financial district or anywhere, just come on down on third thursdays and enjoy the music, enjoy an adult beverage, enjoy the skee ball; enjoy an adult playground, if you. >> i just feel like this is what i was born to do when i was a little kid i would make up performances and daydream it was always performing and doing something i feel if i

can't do that than i can't be e me. >> i just get excited and my nickname is x usher my mom calls me i stuck out like a sore thumb for sure hey everybody i'm susan kitten on the keys from there, i working in vintage clothing and chris in the 30's and fosz and aesthetic. >> i think part of the what i did i could have put on my poa he focus on a lot of different musical eras.

>> shirley temple is created as ahsha safai the nation with happens and light heartenness shirley temple my biggest influence i love david boo and el john and may i west coast their flamboyant and show people (singing) can't be unhappy as a dr. murase and it is so fun it is a joyful instrument i learned more about music by playing the piano it was interesting the way i was brought up the youth taught me about music he picked up the a correspond that was so hard my first performing experience happened as 3-year-old an age i

did executive services and also thanks to the lord and sank in youth groups people will be powering grave over their turk i'll be playing better and better back la i worked as places where men make more money than me i was in bands i was treated as other the next thing i know i'm in grants performing for a huge protection with a few of my friends berry elect and new berry elect and can be ray was then and we kept getting invited back you are shows got better we made it to paris in 2005 a famous arc we ended up getting a months

residencey other than an island and he came to our show and started writing a script based on our troop of 6 american burr elect performs in france we were woman of all this angels and shapes and sizes and it was very exciting to be part of the a few lettering elect scene at the time he here he was bay area born and breed braces and with glossaries all of a sudden walking 9 red carpet in i walgreens pedestrian care. >> land for best director that was backpack in 2010 the french love this music i come back here and because of film was not released in the united states

nobody gave a rats ass let's say the music and berry elect and performing doesn't pay very much i definitely feel into a huge depression especially, when it ended i didn't feel kemgd to france anymore he definitely didn't feel connected to the scene i almost feel like i have to beg for tips i hey i'm from the bay area and an artist you don't make a living it changed my represent tar to appeal and the folks that are coming into the wars these days people are not listening they love the idea of having a live musician but don't really nurture it like having a potted plant if you don't warrant it it dizzy sort of feel like a potted

plant (laughter) i'm going to give san francisco one more year i've been here since 1981 born and raised in the bay area i know that is not for me i'll keep on trying and if the struggle becomes too hard i'll have to move on i don't know where that will be but i love here so so much i used to dab he will in substances i don't do that i'm sober and part of the being is an and sober and happy to be able to play music and perform and express myself if i make. >> few people happy of all ages i've gone my job so i have so stay is an i feel like the piano and music in general with my voice together i feel really powerful and strong

>> hi, i'm lawrence corn field. welcome to building san francisco. we have a special series, stay safe. we're looking at earthquake issues. and today we're going to be talking with a residential building owner about what residential building owners and tenants can and should do before earthquakes and after earthquakes. ♪ ♪ >> we're here at this wonderful spur exhibit on mission street in san francisco and i have with me today my good friend george.

thanks for joining me, george. and george has for a long time owned residential property here in san francisco. and we want to talk about apartment buildings and what the owner's responsibilities might be and what they expect their tenants to do. and let's start by talking a little bit about what owners can do before an earthquake and then maybe after an earthquake. >> well, the first thing, lawrence, would be to get together with your tenants and see if they have earthquake insurance or any renters insurance in place because that's going to be key to protecting them in the event of a quake. >> and renters insurance, there are two kinds of insurance. renters insurance coffers damage to goods and content and so forth. earthquake insurance is a separate policy you get after you get renters insurance through the california earthquake authority, very inexpensive. and it helps owners and it helps tenants because it gives relocation costs and it pays their rent. this is a huge impact on building owners.

>> it's huge, it really is. you know, a lot of owners don't realize that, you know, when there is an earthquake, their money flow is going to stop. how are they going to pay their mortgages, how are they going to pay their other bills, how are they going to live? >> what else can property owners do in residential rental housing before an earthquake? >> well, the first thing you want to do is get your property assessed. find out what the geology is at your site. get an expert in to look at structural and nonstructural losses. the structural losses, a lot of times, aren't going to be that bad if you prepare. an ounce of prevention is worth a pound of cure. get in there and get your property assessed and figure it out. >> so, what is a nonstructural issue that might cause losses? >> well, you know, pipes, for instance. pipes will whip around during an earthquake. and if they're anchored in more numerous locations, that whipping won't cause a breakage that will cause a flood.

>> i've heard water damage is a major, major problem after earthquakes actually. >> it is. that's one of the big things. a lot of things falling over, ceilings collapsing. but all of this can be prevented by an expert coming in and assessing where those problem areas and often the fixes are really, really cheap. >> who do you call when you want to have that kind of assessment or evaluation done? >> the structural engineering community is great. we have the structural engineers association of northern california right here in san francisco. they're a wealth of information and resources. >> what kinds of things might you encourage tenants to do besides simply get tenants renters insurance and earthquake insurance, what else do you think tenants should do? >> i think it's really important to know if they happen to be in the building where is the safest place for them to go when the shaking starts. if they're out of the building, whats' their continuity plan for connecting with family?

they should give their emergency contact information to their resident manager so that the resident manager knows how to get in touch. and have emergency supplies on hand. the tenants should be responsible to have their extra water and flashlights and bandages and know how to use a toilet when there's no sewage and water flows down. and the owners of the building should be proactive in that regard as well. >> so, george, thank you so much for joining us. that was really great. and thanks to spur for hosting us here in this wonderful exhibit. and thank you for joining us . >> as a matter of -- could we push the pledge of allegiance until later, or as a matter of protocol, do we have to start with the pledge? [inaudible] >> okay. why don't we wait until we have everyone here, and then we'll

do that. roll call. [roll call] >> clerk: we have a quorum. >> president stansbury: great. we're going to be going into closed session, but before we do that, we'll be going into public comment before closed session. but seeing no >> president stansbury: why don't we call the meeting back to order. we are just coming out of closed session, and my apologies to the public for making you guys wait so long. it was a very long day. is there a motion not to disclose? [inaudible] >> president stansbury: there's a motion. is there a second? i will second it.

>> for which issue? >> president stansbury: a motion not to disclose what was coming out of closed session. there's a motion and a second. seeing no -- what's that, robert? [inaudible] >> president stansbury: i'm sorry. oh, just take the vote. okay. can we take this item without objection, then? >> yes. >> president stansbury: great. item passes. now we're going back into -- why don't we start with the pledge of allegiance. everyone here, if you'd please rise and join us for the pledge of allegiance. [pledge of allegiance] >> president stansbury: great. thank you so much. why don't we call general public comment. any members of the public that would like to address the commission under general public comment? seeing none, we will close general public comment. next item, please.

>> clerk: item number 5 is an action item, approval of the minutes of june 13, 2018 meeting. >> president stansbury: okay. great. i think we can take those as submitted. we'll calltor public comment. are there any members of the public wishing to address the commission on the minutes? seeing none, we'll close public comment. there's a move -- there's a motion and there's a second. any discussion? great. can we take this item without objection? item passes. next item, please. >> clerk: item number 6, action item on the consent calendar. >> president stansbury: great. why don't we open it up to public comment. are there any members of the public that would like to address the commission regarding the consent calendar? seeing none, we will close public comment. is there a motion? i'll make the motion. is there a second? >> second. >> president stansbury: there is a second. any discussion? seeing none, can we take this item without objection? [inaudible] >> president stansbury: great. item passes. why don't we go ahead and

call -- we'll move right onto item number 7, please. >> clerk: item number 7, discussion item, the investment committee report. >> no action's taken at this committee meeting, but there's education on three subjects -- actually, two. actually, director franzel discussed his plan for an absolute return portfolio. the key points he tried to stress to us was the average wait for the various strategies that we're planning to invest in, even though they are very wide ranges, but focusing on what the average wait might be helps understand exactly where -- how the money will be allocated. we talked about leverage, remember to explain. remember to focus in the net areas, the leverage that we'll be exposed to, which is significantly less than the actual long dollar amount.

we did not discuss any other invetment strategies. part two, our new management director, mr. colins, very impressive, the document he showed to the board, in this part of the meeting. those of you who had not read it, i suggest you get it and keep it. you will start to appreciate how complicated the subject of e.s.g. is that we are going to try incorporate in all of our investments, let alone have all our managers incorporate formally in their investment process. so you'll just start to see how broad the task is and how much detail work must be done to incorporate this new -- how do i use the word? process, and how we're going to incorporate this e.s.g. into all of our investing. one person from cambridge was

there discussing her involvement as well. the key thing to walk we away with during the presentations, we may have voted to do something, we are now starting to see how much work will be involved and how difficulty tricky assist -- it is in chiefing expects rate of return and still doing it with real good social, governmental and environmental policies. it's looking at the difficulty and how it may affect our rate of return. so that's what the committee was all about -- committee meeting. >> president stansbury: thank you for the report. we'll open it up for public comment. are there any members of the public that would like to address the commission regarding this item? seeing none, we'll close public comment. any discussion or question from the board? great. thank you, commissioner driscoll. why don't we move onto item number 8. >> clerk: item number 8, action item, recommendation to commit up to $300 million to

cartica's emergency fund. >> great. thank you. cart and others have -- cart and others have provided the board with some additional data and analysises as well as other data. this strategy is also led and formed by two women, and they're recently joined by a third woman who's recently joined as their coc.i.o. so kurt, thank you very much for the additional material. >> you're welcome. you'll recall at the april 11th abort immediating. investment -- board meeting, investment recommended 300 million to the cartica investment tremendous gee.

cartica was the result of an investment strategy that's announced about a year ago. however when we presented cartica to the board, the board expressed several concerns primarily based on their results -- historical results and some concern in growth and assets. in addition, they questioned the firm's relationship with calpers, and the sizing of cartica with fers portfolio. staff feels that cartica is a great solution for us, a great fit, and we weren't successful in getting you guys to see the same thing was a failure on our part. so today, we want to address the board's concerns, and time permitting, we want to go through an example of a security, one of their top positions. following the meeting, we did have andrew write a separate report which is included in the material where he assesses cartica's e.s.g. practices in both the way they've managed

their firm and the way they've managed their assets. what we'll do is a little bit more of a visual presentation as opposed to what we historically do in a memo driven way. but before we get into this, i want to remind the board of a couple of attributes we got into in our april meeting. first, we look for managers that have a differentiated, innovative, investment process that we think is sustainable over time. we look for managers that have strong business platforms marked by long-term institutional investors like sfers, firms that focus on one strategy, not multidisciplines. we look for certain shared values or alignments with their investors. we don't want to own every security, otherwise we'll look like an index. we look for concentrated portfolios, and if we can find

firms that have these attributes, we then look at the historical returns that we want them to be correlated or have low correlation with the other indices. that's exactly what we found with cartica. with that said, i'll give you a brief overview or background of cartica. it was a a washington d.c. invest 789 firm founded in 2008 by former employees of the w.s.c., which aa branch of the world bank. the firm employs 35 people today and manages $3.1 billion for a select group of institutional investors including some prominent california based institutions,

calpers, calstrs among them. they combine top down country selection and bottom up security selection. cartica is an activist manager, not a saber rattling that we may see on the front page among certain firms. they engage with companies to help them improve their businesses in terms of reporting, capital market structure, and more specifically governance practices. they tend to be a top shareholder in every company that they own. this is important as we go through this. they typically own four to 7% of any one firm's outstanding shares so that they can get the firm's attention, you have to own a big portion of that company. so within our portfolio -- so a couple things, this was an r.f.p. what we were trying to do was see if we could upgrade the

capablities of our emerging market managers. if approved, we're not going to add exposure to emerging markets, they will be funded by some of our existing managers. that said, we have a diverse identified group of emerging markets managers, but we also have three dedicated china managers, and this is why cartica's so important to sfers. because of our concentration among -- of china managers, over 50% of our emerging market exposure today is in china. cartica's highest exposure is in india, brazil, and mexico. cartica's focused at the moment

on industrial and consumer discretionary stocks, so by sector, by country, they're complementary to our portfolio. let's focus on their performance. there's a lot of data shown on page 12 of our memo. and here we just compared cartica's results relative to all the others that we have in the diversified emerging market space. i'm not going to go through all of these numbers, i'm just going to have you focus on the charts on the far right where we plot cartica's peers and their returns, and we show them in two time frames, since cartica's inception, and down below we removed their first year. you'll recall they were up 89% of the first year. so we're moving it. what is telling about cartica's performance is regardless of period, they have produced higher risk-adjusted returns. page 13, we consider cartica

relative to the others in our portfolio on a variety of measures, and this is important. they have the highest tracking error relative to their index. that's what we show on top. they have the lowest correlation relative to the indexes, which is important. and on the far bottom right, we show their correlation relative to all the other managers in our portfolio. cartica has the lowest correlation relative to their peers and relative to the indices. they're an important piece of our portfolio construction. addressing the board's concerns about cartica's performance relative to their index, they're quite different relative to their index. cartica tends to focus on small and midcap companies. 75% of their portfolio is invested in such companies, while 80% of their benchmark are in large cap companies.

the notice, cartica has not invested as much if any in i.t. companies, yes 30% of our benchmark is in -- yet 30% of our benchmark is in i.t. companies. as i noted before, this is true relative to the index, cartica has not invested at the moment in china. china has been, at least up until recently, one of the best performing e.m. indexes, e.m. markets. they haven't invested in south korea, which represents 16% of the index. and it's not because there aren't good investment opportunities. remember cartica is an active investor, and the ability to apply activism or the ability to apply engagement with management in china or korea has been limited. cartica is starting to do some things here, but their exposure's relative to their benchmarks are quite different. small cap companies, no i.t.,

no china. i think we made these points pretty well to the board last time, so you asked that how have they done, how has their security selection been in the various countries that they invest? . what we show, this is a little bit of a complicated chart, the gray bars here show the expected return, cartica's expected return in each of the countries, and that's simply cartica's weight multiplied by the term of the benchmark. in the blue however it's cartica's actual results in those companies. cartica's selection, if you will, across these seven markets is about 14.5% -- has added 14.5% percountry. questions about india specifically, which we show at the bottom of this page, and on page 18, in all times frames,

cartica's got stock percentage in india, cartica's added significant value, over 8% annually since their inception. and you asked these questions, whether their historical selections have been disbursed. here we show the short drivers over the last several years, there's not one particular driver year over year that has driven their returns. the returns have been over each calendar year. which leads us then to how they perform relative to the indices. what we did is we compared their results, again, the same time periods against the mcsi, emerging markets benchmark, but we also compared them to an mcsi benchmark without china, we chaired them to an mcsi without technology, we compared them to an msci, small and

midindex. against all of them, cartica has superioror adjusted risk returns. >> say that again. >> what we didn't do them was show them against a variety of emerging market indexes. what we did here, and we've done on subsequent pages is we compared the results against that index, but we also included several others, the msci emerging market, ex-china, msci emerging markets ex-i.t., msci emerging markets, small mid-cap. >> are there any other indexes that represent the emerging markets small mid-cap space? >> no. what cartica does is very special.

it's concentrated, etcetera, small and mid-cap focus. there isn't a perfect proxy of what they do. but the point of this is to give them their fair shake and have you gain some perspective of what their performance looks like against a more comparable index. and against all of these indices, they produced higher risk adjusted returns. >> how we compared in those markets where we don't have an emerging markets exposure, have we looked at some -- maybe what some of our other managers are doing as a basis of comparison? >> most of our managers in the e.m. space look a lot like the index, and that's part of what we're seeking to achieve by getting differentiated exposure. we won't go through the list of the names, but they tend to have benchmark like exposures in terms of market coop, in terms of countries, in terms of -- cap, in terms of countries, in terms of sectors. >> i don't mean to hold you up,

but did we see -- i think willington was one -- we will wellington was one of the names on the chart. did you provide anything that we can see what they're doing in the same markets? >> we do. we didn't think it was important relative to the examination of cartica. cartica is different than what we're doing with wellington. wellington has a large and midcap bias. cartica represents something very different. >> okay. thank you. if you'd like to keep going, please. >> wellington's exposures would be much more benchmark like, like country, company, active share, tracking error, etcetera. >> i've moved us to page 24,

just in the interest of time. bottom right hand graph, and again, apologies for a lot of data here. what's important, again, here is this context, rolling three year periods, cartica has much lower correlation -- has low correlation relative to all of these indices. >> here on the lower right is cartica's correlation is very different than the market as a whole. they have much more stock specific risk rather than market risk, and on the lower left, what we also like, is that cartica has meaningfully less volatility of returns than the benchmark as a whole. >> okay. i'm going to move us to page 25. i think we've demonstrated that

cartica is different than the benchmark index. they provide substantial downside protection relative to the indices. their drawdowns, which are often losses from peaked trough tend to be less than that of the index, and their recovery from those drawdowns tends to be faster. and the hall mark of a good manager ultimately, and the way to compound good results over long periods of time is to lose less and recover faster. and these are the types of textured analysis that i don't think we -- we didn't provide last time when we just look at three-year or five-year comparisons. so we talk about cartica, they manage a concentrated strategy, which we like, high, active share, unique process with high barriers to entry. there's an e.s.g. relative to what they do, and that's what

staff sees in cartica. i'll pause here because we're going to go on and talk a little bit about their gross assets under managers, calpers, and i want to first address questions on their performance. >> commissioner driscoll. >> captain driscoll: i'm going to go to page 22 and page 23. you had a couple months of performance were added from what we saw two months ago, correct? because you can see the inform 4.2 for the four months that would show sort of an uptick in the chart on the right on page

23. the point, though, i want to focus on -- [inaudible] >> absolutely. >> captain driscoll: which maybe that's why you added it this way. we figured it out last time it's not as compelling as a case looking at their since inception numbers, particularly since it was with $200 million. if their goal is to have 47% ownership in a -- 4 to 7% ownership in a company with $200 million, they weren't going to get very far, but which is the better indicator of who they are? going back to 22, you've highlighted the three and five-year numbers. not a particularly compelling case. certain places in the footnotes indicate net numbers -- numbers, but i can't tell if they're net or gross numbers. >> they're net. >> captain driscoll: okay. we're going to pay over 1% plus

a carry. to me, not wonderfully compelling. but to me, diverse identifying across managers to achieve what we want to do everywhere, actually, so i can see the case for that. but the certain things that are not very compelling, if you look at just -- when you look at just certain years, they didn't do very well. granted, we want longer holding period. would this type of manager be prepared to hold longer? do you happen to know what their average turnover is? >> yeah. it's -- i believe it's 20% annual turnover. >> okay. it's a very high for hold. that contributes to less volatility or not, but believe it or not, that's part of their strategy, whether it shows up in the numbers or not. that's one of my observations as opposed to q&a. i'll come back to part two after you finish. >> the comments you made about

three-year and five-year numbers are irrefutable. what's more important to us is how these guys look like over rolling periods, and again, what we're trying to seek is high incomes, low adjusted returns, but recall we're considering them in a portfolio context. >> not bad, just not really good. let's move to -- >> you know what, maybe i'll just offer some comments real fast. you don't have to answer them. maybe you're going to touch base on them. i'm just curious about what happened in the first four months of 2018, right?

you know, the welling numbers are interesting but not compelling. there's been a couple of blips in the six, seven, eight-year time frame, but we haven't seen a lot of replication of that. and then, i'm just trying to get a better understanding of who else is in these markets, india, mexico, fellowshphilippo else is doing well. >> so the response to that question in particular is we just show how well they have done relative to the indices, not relative to the active managers in those markets. >> and that's one of my other

questions, is there a good indice? you said you're going to compare the markets to a good indice? what's a good indice. >> over the long-term, it is a good idea. when you have a manager that looks so different, that's what we're seeking are managers that look different than the index. >> okay. >> 99% active share here. >> please continue, unless any other board members -- >> when you put all the managers here with their different specialties, then you aggregate those and put them together and see if they beat the index. but that was the plan, right?

>> this specific manager fits well in our portfolio. >> yes. >> that's the distinguishing -- if we're going to pick this manager, that that's the aspect you like the most? >> well, that's one. but their experience is pretty special, too. >> mm-hmm. yeah. >> yeah. >> the investment process and experience of these -- this group makes them compelling. >> mm-hmm. >> the fact that it fits well and it's complementary makes it more -- makes it intriguing, but if it weren't for the differentiated process, the collective process with the i.f.c., we wouldn't have been interested. >> and so what we're trying to figure out is can we see that in the results? i think that this -- that's our job right now, is can we see that. >> right. >> and is there anybody else -- because i think what you're saying is there's nobody else who fits in -- i mean, the process is only as good as your

results long-term, right? >> and we should -- maybe this is a place for us to talk about that process. this was an r.f.p. that we've issued may of 2017, when we were seeking managers in emerging markets, global, and developed international. dan has some of the statistics, but my recollection is it's something like 130, 125 responses? >> yeah. we started by evaluating on the order of i think it was 136 different strategies, but we drastically determined that only 36 of them qualified for what we were looking for. and again, we were specifically looking for managers that were very different than the current managers that were concentrated, high tracking error managers. and so we focused on those 36. we came to you with a list of 30 semi