>> president bridges: rollcall

please. [rollcall]

>> we do have a forum. >> president bridges:thank you madam secretary you everyone for coming back to open session . at this time i get a motion to propose the session on the cfo february 7, 2012 a. >> vice president casciato: i will make a motion not to disclose. >> i'd amend the motion it applies to 2 and closed session 3. and i'll second. >> presidentbridges: so . commissioner, youaccept the amendment ?

>> yes i do for both sessions. >> is moved by commissioner casciato. we will not disclose items discussed in closed session three the on the san francisco administrative code section 6412. madam secretary, please open the phone lines for public comment.>> members who wish to provide public comment should call 415-655-0001. press 187-636-6566 and pound, pound. if you have not done so already rest star 3. a system prompt willindicate you have raised your hand . wait till the system indicates you have been on muted and you

may begin comments . we will have a standard two minutes to provide your comments . moderators, we have callers on the line. >> madam secretary, there are no callers on the line. >> public comment is now closed. >> rollcall. >> trendline.

>> we have 6aye's, the motion passes . >> you madamsecretary, next item . >> annual publiccomment . >> members of the board, we've received one emailthat we will include in the general public comment . it isfrom john simpson and it reads as follows . your board members very knowledgeable about investing. i hope when it comes to investing in hedge funds miss gandhi does not go along to get along. you should divest from hedge funds for the same reason public pension funds like hers in the state of new jersey are divesting from them. ds, you should also stop calling hedge funds return investments.best regards from john simpson, a 46 yearmember . that was the onlyemail submission we had for public

comment . >> president bridges: thank you,madam secretary if we can open the phone lines for public comment . >> callers, if you have not already done so press star 3. any callers on the line? >> madam secretary, there are no callers on the line. >> presidentbridges: public comment is now closed . thank you madam secretary. next item please. >>item number five, action item, minutes of the may 12 21 retirement board meeting . >> president bridges: commissioners, youreceive the minutesfrom the may 12 toward meeting . what is your pleasure ? >> moved to approve. >> i will second. >> president bridges: second by commissioner casciato that we approve the minutes from our boardmeeting .

may 12,2021 board meeting . madam secretary, please open the phone lines or public comment. >> a reminder to the callers to press star 3. any callers on the line much in mark ... moderator, do we have any callers on the line in mark ... moderator? can you hear me? we are having a little technical difficulty rightnow . >> madam secretary,there are no

callers on the line . >> president bridges: ring no calls,public comment is now closed . >> president bridges: rollcall vote please . [roll call vote] thank you, we have6 aye's. motion passes. >>president bridges: thank you madam secretary, next item please . >> item 6, action item consent calendar . >> president bridges: what's your question?

calendar. >> president bridges: it has been moved by commissioner casciato seconded by mister driscoll the consent order. madam very open phone line for public comment. >> any callers star 3 to be added to the queue. do we have any callers on the line? >> there are no callers on the line. >> public comment is now closed. >> president bridges: will. [roll call vote] we have 6 aye.

motion passes. >> president bridges: next ite . >> item, investment. >> president bridges:. >> thank youpresident bridges . >> president bridges: commission report, i'm sorry, commissioner friends. >> scott heldfond: that's okay bill, go ahead. >> president bridges: for over to him but you are the chair, i willover to commissioner heldfond seven go ahead bill . >> ahsha safai: >> bill coker: the investment committee meeting was held last month regarding a walk through the different futures of the committee and model. it was an presentation and discussion.

it was an educational item only. the board can take the model up as we go forward. >> i appreciate your team organizes these meetings and i think the turnout in the historical turnout has been the evidence is that we are getting substantive and meaningful time information so all the help for the report. >> president bridges: thank you mister coker on the investment committee. this is a action item only so if there are no questions from i will open it for public comment.

>> cfo over made on summarizing the paper written by people from the world bank aboutthe 80 was well done. there were some illusions regarding their experience . we had a lot of bumps on the road to their success over there and although they only usedfloorplans represent what occurred in canada , there were many things not discussed that we would want to be aware of in case we tried to go down towards that type of a model. i just want to point out there were a lot of issues we did not discuss even though it was a great presentation. >>president bridges: any other observations or comments ? if not, again, the discussion item so now at this timeyou can open the phone lines for public comment .

>> if you have not done so already pressáthree. for those on hold continue to waituntil the systemindicates you have been on muted . moderators, do we have any callers on the line ? >> madam secretary, there are no callers online. >> presidentbridges: public comment is now closed . >> commissioner heldfond and cio coker, thank you for really convening a great investment committee meeting all year. the information was very timely and the research was done well so thank youto the team and thank you commissioner for leading that at thecommittee chair . madam secretary, next item please . >> item number eight, discussion item, reports on investment requirements for retirement fund forthe quarter end of march 31 2021 .

>> thank you madamsecretary . i will turn this over to miste coker . >> bill coker: we had another outstanding quarter on top of a most extraordinary fiscal year to date. returns have been truly spectacular. i'll have more to say in the cio report on the quarterly report as well as returns in april and may meanwhile alan will walk us through this item . >> can everyone hear me? thank you. you have before you the goods andperformance analysis report for calendar quarter january 20, 2020 . this report was generated through last friday the essence b is up another 6.7 percent and we would estimate total fund is up even more than the 6.11 percent bills report for the

quarter. that would bring your total fund return through may 31 two 30.62 percent which is truly extraordinary and there's more to come assuming the markets don't reverse in june. as profiled on page 2, we are experiencing massive strength in us consumer demand you'll by ongoing low interest rates and unprecedented financial stimulus. initially as you will recall coming out of the financial crisis, that stimulus was disproportionately led by the top file in income and benefited household and folks like you that financial assets. in contrast the capability to generate this broad fiscal support enables a much broader participation in the current expansion and you start to see that when you look at the next page because a briefsummary of

the first-quartereconomic environment , gdp growth up 6.4 percent . the sales the end ofthe year quite strong . unemployment was down although we added at commissioner driscoll's request, unemployment does not measure people who have left the labor force and aren't actively looking for a job. labor participation which is the percentage of the population that's actually working as continued to stay stubbornly high, reflecting the fact that a lot of americans just did not come back into the workforce andin the long term that is on what disturbing . the fly in the ointment to all this is the potential for significant inflation and rising rates so if you look down you'll see cpi saw an uptick, 2.7 in quarter one and as of may that year over your number is up 4.2 which is the largest increase in inflation

we've seen in decades. the federal reserve as you will see raised interest rates on the 10 year treasury from .92 1.6 percent and the yield curve as deepened and you will see that when we look at the end tax of rising rates on fixed income. the market although the equity markets have done quite well but not nearly done as well . the fed continues to be committed to his stimulated action and you can see with these stocks are continuing to price at a high level. i did want to read a quote from bridgewater about the environment which would be the ongoing fiscal push into a strengthening economy is creating strong pressures on growth and inflation . the fed could be forced to pull back which increases the risk assets underperformed the economy .

there's a wide range of potential outcomes and a rate of risk in inflation than there has been in a decade and many portfolios are not prepared. a few benefit from having taken actions several years ago with broader diverse indications across assets and geography . so with that if we take the step to the next page tojust look briefly at the underlying capital environment , you will see that in quarter onewhich is that first column , everything is up except public fixed income which was down 3.37 percent which is also impacted i rising rates. that's why you strategically shifted what has been is directly public market fixed income into private debt. you'll see over the same period looking at your private debt portfolio later it was up 5.05 percent so strong reward or a

strategic action you took a while ago. s&p was up 6.3. our 2000which is that you smallest docs is up 12 percent . private equity was up 13 percent. commodities which influence real asset returns 6.9 everything did well with the exception of fixed income and real estate has alsolacked . if you look at the year everything was up. the snp up 56 percent but fixed income which is the 40 in a 6040 portfolio was only a 70 basis points. small did well, international didwell , real estate lagged so you see a supportive environment for financial assets. with that if we turn to page 18 which is the summary page, i'll give you a chance to get there.

the top line on this report is the net time returns for period indicated with the ranking in your group universe of 83 public funds with more than $1 billion in assets .the most important result on this line is we have generated returns that meet or exceed the rate sufficient to amortize our liability. currently at 7.4 percent and virtually every time period reported here though the answer is we generated sufficient returns? the answer is strongly yes including if you flip to the next page over 1520 and 30years . we've added value versus simply indexing the assets in a global 6040. or a domestic 60, 30, can be in real estate over all period's

greater than a year. as bills cio report will indicate we've chosen to diversify our assets with the expectation that in down markets over a full cycle , we will outperform , but recognizing an extremely strong market upswings will be carried up with the market we will slightly underperform the pure groups which tend to have slightly more inpublic markets . at the condition we're looking atwhen you look at the fiscal year-to-date and one your returns . wrong returns thatfrom a competitive standpoint not nearly as strong lastly , the fund as a policy index which reflects our asset allocation targets and benchmark returns for each asset class. the policy index attempts to mirror what we would have earned if the staff were to always have each asset class a its policy target .and the asset class earned what the benchmark earned. as a result, the difference

between the total funds return and policy index represents value added or detracted from portfolio positioning and or manager selection. you can see over the past five and 10 years the next of the results if you compare the top line to policy index has been a very strong 2 to 3 percent and i will tell you counseling a lot of public funds that is a strong result. to put that in a dollar context, over five years the outperformance of our policy, 17.79 minus 10.37 over the 640 is 1.42 percent in dollars that would be $2.01 billion. in the 2.8 percent outperformance versus, i'm sorry. that's versus the policy index. the 2.8 percent of outperformance versus a global 6040 index is or $.04 billion

so we had a strategy. we consciously chosen to diversify so we are not subject to reversal and over the longer term that rewarded us in a very strong way. one of the objectives of that diversification is to operate a total fund with less volatility than the markets that sell. protecting the funds from severe market pale risks. the most common measure of that volatility is the standard deviation of monthly returns and if you look atthe two tables to the lower right , the annualized standard deviationin their portfolio , 7.6 percent over the three-year 6.23 over the five-year, both of which rank in the bottom six percent meaning you are less risk in terms ofvolatility than 90+ percent of your peers . the different plans choose

different asset allocations and volatility levels and wemeasure your portfolio efficiency , yourreturn to unit of risk . as measured commonly by the sharpe ratio by the fortino ratio. the sharpe ratio is simply the return above the risk free rate and for this you can virtually think of therisk-free rate of zero with interest rates as low as they are divided bythe volatility . so for five years ,you see your sharpe ratio 1.71 , top two percent of your pure group, three years 1.32, top three percent of your pure group. the sorrentino ratio is a similar measure but itlooks at return for downside . it's developed by san francisco state professor frank sorrentino and his design look at the return and down. and you see a strong ranking i the top two percent of the pure

group .lastly for the year ending reporting one, the investment gain of 29.63 percent equates to $7.62 billion and as of 3:31, the market value for plan assets is 3.06 million is an all-time high very little troubling information here. the underperformance versus peers in that one year is easily understood i having a lower riskexposure . if there are no questions here i've got a couple of comments to follow on compliance and where theperformance came from. i'd be happy if there are any questions . if not, if we go to page 20. this is a compliance page so the, this chart compares your actual performance in each asset class as of 3:31 with the long-term target range and indirect target.

you can see all the allocations arewithin the ranges .they're very close to both indirect and long-term targets with the exception ofprivate credit . i think the board members understand you got into private credit 3 to 4 years ago. it is a private asset class it takes time to deploy money so you're up to the five percent which is good progress but still below the target and you see and underweight to treasury because that's where we put the leverage but we are not leveraging the portfolio at this moment in time justto show we have approval but we don't have any . all the asset classes are clos to target . most public funds building private market exposures are below their long-term target in private equity. you listen long enough in private equity to be actually

at or above your target very welpositioned . any questions on compliance and policy ? if not, if we flip to the next page, 12:22. they aresimply here to point out two things . one, the fund -like most matur plans is cash flow negative . you pay out more than you collected contributions and it has to be expected of a mature public fund.you also note for every period, the investment returns far exceed that negative cash flow which puts youunder a healthy state . if you were to divide that cash outflow of $500 million, it's around 1 and a half percent for most plans. that's from 1 to 3 so you comfortably have deficient liquidity to be able to invest in the less liquid private

market asset classes which are produced extraordinarily higher returns so again, nothing on this page ofconcern . the next two pages go through more detail . your rankings against your pur group . if we start on page 23, the one your results, each point in that chart is a public fund greater than 1 billion. they are plotted on the verticalscale in terms of return . on the horizontal tail in terms of tenderdeviation . san francisco is the green square so as we noted early, a performance result slightly before medium and look at that level of that line, it's 30 percent. so extraordinary performance but below median in arising market . substantially lower risk than

appeared group which we said earlier. the black triangle is your policy portfolio and again, while we slightly underperformed in this period which we will describe in a little more detaillater , we did it with much less risk . the objective of damaging a lower risk portfolio which we have some control on and have achieved in returns which we don't always control have been extraordinarily good in this environment. if we go to page 2 which is five year results which are less ugly to be bounced around you see the same chart on page 24 to the left only five or six funds at lower risk than you. five or six of those dots to the left of you and you will see your return is i are everyone but a few in that chart. in this case you seethat your performance , that green triangle, the operation of the

actual portfolio versus policy has produced both higher returns and at less risk which is a desirable result. i won't go into the 10 year because you will see a similar result in that respect . if we turn to page 21, we are going to look a little bit at where that outperformance came from by asset class and by positioning so on page 31, you see simply plotted quarter by quarter the outperformance or underperformance for each policywith that blue line being a five-year moving average . it does bounce around a little bit. these are markets. we don't control them. we can't guarantee we are going to outperform in every environment but if you start q2 of 2017 that blue line turns from to a definite slope upwards and you can see how

many more of those markets you had in this period time. if we look at that five-year rolling return versuspolicy, that blue line , it's roughly 1.62 percent and if you turn forward to page 34, we're going to take that 1.62 percent of outperformance versus policy and decompose it into how much came from asset allocation affect, i.e. did we overweight asset classes that did well and underweight classes that did poorly. versus manager selection effect which is the manager in that asset allocationoutperform the index ? the allocation affect at the top, we don't want that to be big. if it were too big you would be

taking a lot of positioningrisk . here it's positive and that's a good thing but it's small. that leaves 1 and a half percent per adam next of fees that come from outperformance by asset class. if you go down this list you had outperformance in virtually every asset class with the exception of 2. the absolute underperformance recall is against 2 bills +5 which is an aggressive benchmark and david has described the difficult period in the middle of last year, march orapril of last year we are recoveringfrom . the other one is private equity . this has to do with your choice of benchmarks. the benchmark you are using is apublic market equivalent , 75 percent of the russell 3+25 percent of the mfc i wait, the

global equity index plus the spread of three percent so your actual private equity portfolio when we look at it over five years as generated 19.07 percent per adam. anybody who has gotten a result like that, that's extraordinarily strong but the index is a three percent spread and if you looked earlier and added the russell 3000 to the msci, the benchmark was up 19.08 so there is underperformance versus that benchmark. when we look at that you will see that we very strongly outperformance your peers at this underperformance has to do with the benchmark selection as opposed toanything related to poor performance . with that i wouldask you to go to page 45 . we are now going to look at the risk adjusted returns for your

variousasset classes . on page 45, it's a busy chart but just as in the total portfolio when you measured the sharpe ratio being the return of a risk free rate divided by volatility, the equivalent measure with respect to asset class is the asset class return above the benchmark divided by the volatility of the actual results around the benchmark so you see annualized aj, tracking errors, those are the two equivalents and when you divide those you getwhat's called an information ratio .very similar in concept to the short ratio and if we go down the page your public equity top one percent, us equity top five percent, emerging marketstop one percent, global equity top eight percent . you don't see a ranking in

equity because you'll notice over this period we underperformed index and that number is negative which is improper bob to rank what we've had underperformance and you see it here in developed market equity. that has to do with managers that have been replaced and a slight value tells to our allocation and as we looked at earlier while value has come back strongly recently is not been rewarded overa long time . if you look at these numbers and look at the consistency of your public equity, very very strong competitive results. the next page, page 46, similar statistics on fixed income. one you will notice its 6.36 percent of your portfolio so that's been strategically reduced. we have had underperformance there from the core and core plus.

as you know from the investment committee meeting is looking to restructure thoseallocations . and the duration of that portfolio and a period ofrising rates is modest. the underperformance is there . it's not a performance concern. if we turn to the private markets on the next page, page 47, private credit is listed first and i want to emphasize particularly the return to private credit over this period is 10.77 percent come. compare that to what public market fixed incomes did on the prior page or you were looking at numbers in the twoand three percent range . that's why we adopted that allocation to private credit. and the nice thing about private credit is one, it at least in the direct lending portion typically floating rates which means if we have inflation and rate increase, this private credit allocation

will actually mitigate that. and two, your staff and cambridge in researching the managers that manage that portfolio, those managers look at individual loans, most of them are senior secured meeting if something goes wrong, it's unlikely something goes wrong but if it does your secured which puts you in a much better situation to withstand credit issues than if you own enron bonds and they get downgraded where you still have a lot to control so again, that's pretty adoption of that private credit is already looking strong, looking back and we wouldsubmit going forward is evenmore important . by the equity , we talked about this earlier area i would add if we looked at the cambridge private equity index line from the first page we talked about, that's 15.64 percent so you see again your private equity of 19.07 has done very well against your top 13 percent.

this is time related, this is not the right measure but tory cove report in july the irr rate being a multiple of invested capital. so this is strongly indicative of thisperformance . their result will do in more detail and real assets have come back as commodity prices. as we see some inflation there in the portfolio 11.1 percent of the total, 8.03 percent, prop seven and the real asset managerswe track . i would suggest that you have a policy that shifted to be more conservative. to protect you against what we see as cover sledding but over the longer timeframe you the

results you gotten have put you in a strong position relative to peers. i'll take any questions. the summary as you can see underperformance in an area where we weren't aware of and we have corrected action underway. iwould be happy to take any questions . >> i have a comment and i just wanted to thank theinvestors because there are hard part . >> one minorquestion and it relates to cash . it's not so much about the wasted cash and i understand how does that appetizing the cashprogram . >> because there's a number on the cios report about.

>> and i can come in here. >> i'm just wondering how is that moments component doing w advertise it . >> we overlay it and originally that was equity station. but when we went through the financial crisis last year in march , to be conservative and conserve our liquidity, the overlay is done withtreasury overlay, not an appetite overlay . it's a small value added but it's not an overlay inequity . i don't know you want to describethat in more detail . it's not an acquisition at this point. >> that's correct. as of last may we stop the overlay. we have treasuries and that's

what's been driving the liquidity . as of november, we will go over the additions from the cio report and as of november last year, the board approved the strategic allocation to leverage and the leverage will take over the cash overlay because the leverage is adjusted for cash overlay. talking about the details, that portion is currently not in. >> did that cover your questio ? >> i don't know if anybody can hear me but not one word of whatyou said have i heard . i'll try to call you both tomorrow to get your answer . >> commissioner casciato, i

think you were cut off. >> vice president casciato: i didn't have a question. that comment was i want to thank the investment staff and consultants forthe tremendous job they've done over the last several years . thank you very much. >> are there additional questions from the commissioners to mister coker oron this presentation . any additional questions or comments? i do so much to mister barton, and mister coker and the entire investment team. it's an excellent report overtime and we looked at first

the question of stem investment so thank you very much. we appreciate it. and i hope we can keep it up because we don't know what's uncertain right now so hopefully we can maintain momentum. so thank you very much. >> this is a discussion item at this time we will ask for public comment . >> presidentbridges: a reminder to any callers , press star 3 to be addedto the queue . >> madam secretary, there are no callers on the line. >> public comment is now closed. presidentbridges . >> president bridges: next item please. >> item number nine, discussio item . the investment officers. >> is overcoming your up.

>> for members, there are a couple of new features to cio report going to ask, to walk through and introduce the new members and i will take it from there.>> thank you commissioners. asi mentioned last year , last november , the board approved many strategic allocations. that included three percent targets, strategic targets to leverage. this gives staff flexibility in implementing some of the especially less out of your own part of our asset allocation through deliberate evidence and doing that cash efficiency. specifically first staff reviewed including reviewed our

custodians being their capabilities to properly report the exposure of leverage portfolios or events portfolio. we also talked to multiple references that are similar public funds for using leverage and we use their experience in implementing difficulties as well as reporting it to the board . we also used multiple providers for portfolio leverage and although it's an overlay solution, with an eye towards the needs that we first were looking for. so far we determined our current provider offers competitive implementation and

offers adequate reporting of the leverage. we determined that we historically like to implement using u.s. treasury futures and potentially part of the equity connected to those futures. the hearing got to implement total leverage injuly . far as alan mentionedin his report , we didn't have total plan leverage even though the liquidity management we implemented prior to our exposures were derivative through the futures out walking through that . so in preparation for the introduction of plan leverage , the amended the cio report to report cash leverage offsets. i'm going to share the cio report and walk you through the details.

please let me knowif you can see this . so hopefully you see this is page 9 ofthe cio report . and you will see cash and leverage calculations that are new. the cash exposure is net of other exposures in the portfolio. for example, currently we have exposure to us treasury bond intermediate bond index. through treasury futures. managed by parametric. it's about 380 million and it is includedin this fixed income outlay . so the two point four six billion exposure to fixed income includes the synthetic

exposure through futures or we call it cash efficiency exposure to the treasury. that's 380 million exposure is then subtracted from the cash line.and therefore the cash reported on the state next page are other synthetic exposures. it's if we increase our treasury exposure even further, for example we increase one percent , 340,000,002 treasury exposures through this line, the cash will go to zero. the cash exposure will go to zero and we will introduce leverage exposure to -.2 so that the total weight sums up to 100. so at the same time, we changed similarly where you see the cash position and leverage

asset position calculating exposures. to make sure that we properly report our actual cash positio , we amended the last page, the old cash. that reports actual balance of the cash at hand. so our actual balance is 412. in the beginning of may. we paid 114 million inbenefits . we also sold exposures for equities and other investments and raised 305 million and our balance as of the end of may, cash balance is 603 million. projection going forward you will see that we expect, we plan currently for 200 and we

will be amending the investments going forward but currently we budget about 100 million every month for pension payments. we expect employer prepayment contributions thefirst week of july . 300 736 million. and as we also expect net contributions rate or outflow to our liquid portfolios like private equity, private credit and this is how much we come back. so that's the overview of the cash movement and calculations of leverage and reporting of leverage that we can expect. the second change that we introduced and it's on the last page is in line with the credit line facility. the board approved last june

and in august we introduce the policies and procedures for reporting of credit. we've been very fortunate to have plenty of cash. however this month we plan to correct past the credit facility making sure we have a need for thecredit facility is there . we also are going to report credit facility usage and availability in line with the policies in august. that concludes the changes to the cio report that we introduced in order to make sure that we are in good position to report credit liquidity. back to you. >> go ahead.

>> i like the reporting on this, i like to break down so it's very transparent on the credit facilities because that's something we talked about when we were talking about rules and regulations of how we set it up. thank you very much for strategically outlining every single aspect . >> board members, in the early period you can see numbers here. and i will walk youthrough the first few months . just so everybody is clear and understands what the numbers are and what the numbers mean. meanwhile, any questions or comments ? okay. very good. turning then back over to the broader cio report, and by the

way on page one that should read may 2021. we had another extraordinary month on top of all recent months. another 3.54 percent in private equity. we were up about 11 and a half percent by two factors. one is we had a large ipo that was exceedingly successful and also there's the writeups to public marketequivalents . which in 2q on our private equity reflects december quarter values and of the private public equity public markets were up very significantly in 4q. other parts of ourportfolio also did well . private credit was a more than two percent so it was real assets that had begun to stage a comeback. initially, the rally post

covid-19 was private credit and absolute return also joined in market recovery and more recently it's been in real assets as well. i'm going to skip the calendar year to date and we will go to the fiscal year-to-date. so with 11 months in the book, we are up 30.62percent . we needed to post an approximate 20 percent return for the calendar year and june to have a 100 percent status so you could have your own estimates as to where we are there . we're possiblyright around 110 percent . the private equity portfolio has been red-hot, on fire. almost 60 percent. the ipo market has been most extraordinary. there's a lot of terrific businesses that are being, that have been priced richly but in

my opinion they've mostly been fairly valued. we have terrificprospects going forward . and in addition to that there's been equivalence in public market writeups and north of 10 percent of our private equity is in a equitysecurities that's normal , that public equity securities continue to be held. there are private equity books which are now somewhat more than usual. in addition, our public equity book is all up almost 40 percent. initially in thefiscal year that was led by the rally in biotech and technology but more recently it's been very broad cyclical sectors , international and emerging markets have also recovered extremely well here in recent months. on a fiscal year-to-date private credit is almost up 18 and 14 percent respectively but

as i indicated, the real assets portfolio has now asked into that territory and is not eigh percent on a fiscal year-to-date basis . that's all occurred in the last quarter. it's north of seven percent in the past quarter. the turning to a discussion of returns, just to add a little bit on context to allen's report is that our strategy as a reminder and also for new commissioner gandhi is that our strategy tends to achieve 2 objectives. one is to post better returns in down markets. so have better resistance, better markets decline and the second is to outperform over a full market cycle which we deployed there. and we attempt to reduce our

systematic exposure to the market and thus our exposure to a market loss through a different shaded approach to asset allocation namely we have less exposure to public equity than our peers by about eight or 10 percent. and in a major market equity rally , that's going to cause us to lack our peers but on an absolute basis given that the very definition i just cited is a major market rally is that our absolute returns would look very good but we expected to trail our peers and as stated so in the last couple of annual updates on our risk exposures which we do in 4 quarter of every year but we expect to outperform on a market cycle through good manager selection

and allen's report , he just highlighted a couple of pages over the past three and five years but about 80 to 90 percent of our access returns this has come from manager selectionand you see that on the table , envelope on page 2 is that we've outperformed by north of 1 and a half percent forthe past quarter . nearly 3 percent on a fiscal year-to-date basis but we lagged on about two percent over one year that we've outperformed by 2 and a half percentover the three years . so the sum of all that is we are achieving our objectives. and you'll also see that on page 3. and so as alan indicated, these are measurements of risk total portfolio risk , standard deviation and you see our total portfolio risk is running about 25 to 30 percent less than our

peers so it's significantly less. and in addition to that, our volatility is also running considerably lower than our own policyindex . and then in addition to that our sharp ratio which are measures of risk-adjusted returns and risk-adjusted returns in down markets, both of those are approximately 50 percent or so plus or minus some better than our peers and index. bottom line is that we are achieving all our objectives . weare hosting very good risk-adjusted returns . we posted every good relative returns and down markets. we posted every good absolute returns in all markets. and we're outperforming our peers over a market cycle. i did want to comment briefly on the inflation, given an

extensive writeup. alan indicated also we had some comments to make about inflation. the one month inflation rates in may was the highest in 44 years. and the one year rate of a little over four percent was the highest inwell over a decade . the, there's a lot of factors that gointo inflation . you can read between the lines here a little bit .i'm a little skeptical at the reported rate of inflation. it's the actual rate of inflation that's experienced by consumers. you can see as i've highlighted here there's a number ofreasons that go into that . thesubstitution of fact , adjustments, etc. the bottom line is that the inflation is inherently very difficult to measure because it's 80,000

good, across and each region has its own economic experience with differenttypes of goods . and it's an incredibly complicated metric to measure. this writeup was conveyed to convey both its importance and complexity. the beginning on page 6 we have seven closed items that the board approved in closed session that have since closed and are due to be reported to the board. in addition 4 more have closed in recent days since the application of the board materials and before today's board meeting so let me run through those 11items real quick . this is an initial strategy,

our first ever investment with the firm. our private credit the board approved an allocation of up to $70 million last month and indeed, we closed on 70 millio . control environmental goods which is also equally bringing capital , the board approved $50 million through our real assets portfolio and we closed on $3 million. this is our first investment with equilibriumcapital . the flagship core investment in our private equity buyout portfolio, this is our ninth investment. the board approved $50 million in march. insight partners, the board approved and allocation of $100 million in two insight funds. we closed on $50 million in

their flagship fund and $20 million in their annex buyout strategy. we are a 6 two 7 your investments withinsight . milestone real estate investors, this is our first investment with milestone. board approved an investment of the. hey, you are also a very seasoned investor with ta. the board approved an allocation of up to $100 million between 2 ta funds in march. we did close on $80 million and theirflagship fund . five more to go. this is our first investment with vita ventures. vita is a private equity investment and the board approved 35 million and we did

close on 35 million. for more to go. i culture, this is our first investment tiger, obviously it's an agriculture finance strategy at the board of 50 million . because the pag which is one of our flagship poor investments in our private creditstrategy . this is our seventh investment with pag. the board approved up to 125 billion. this is a music royalty strategy, the board approved an allocation of up to 60 million. we closed on 50 million. this is our second investment with primary wave. level equity, the board approved 40 million between 2 level equity strategies.

we were allocated 29 million to the flagship fund, $11 million to the equity opportunities fund. this is our second investment with level capitali have just one or two more things to go . i will turn back to the cio report. on the investment committee, we do have an investment committee scheduled for just over a month from now on wednesday, july 19 from 1 to 4:00. staff has been preparing vigorously for this meeting for quite some time. it's a heavy lift. there are going to be 4 different teams presenting in addition to an apc. you see the five items and it's a private credit as well as liquidity analysis and our schedule and alan will be giving his initial annual report on our coinvestment

program for the delegation of authority that existed for yea 2020 . it's a heavy lift. there's going to be a lot of valuableinformation at the ic report. second to last , on personal updates there are no new staff members to report departures. importantly, the action on the buildout of personnel staff for the strategic plan, that is underway.we have done the infrastructure behind the scenes before this goes out to the public there. and that will be ready to be rolled out so next month. lastly i wanted to report on the last page of the cio report. that isthe monthly asset .you see it closedthe month of may at 33.9 million . $33.9 billion as of last night

we are over $34 billion. we were at a 4.9 billion just 14 months ago. we've made over $9 billion. cash outflows in just 14 month . that's the most extraordinary recovery. with that, commissioner bridges i will turn it over to you for comments . >> president bridges: thank you mister coker. any questions for mister coker onhis report ? mister coker, i'd like to say thankyou . it's a lot of good news in your report and first of all as i said earlier, thanks to you and anna for the new outline and also for achieving over 34 billion and the potential of having funding of over 110 percent estimated. coming up. i think this says a lot and

speaks volumes to you and the investment team another one for meetings including our plan , i applaud all the hard work you've put into this it's not easy particularly in the markets that we've had over the last year so thank you so much and i salute you and the investment team and all the managers so thank you . >> iq president bridges. methodsare rarely going to be this generous . >> so there's going to be some back-and-forth. there's going to be a period probably sometime in the next five years where we're honest in the belly. but i do think that we have a very good strategy. we have a good approach to asset allocation. we have a good philosophy towards manager selection. i think there's a lot of and the value in our partnerships with our gps and we have a talented team that does

incredibly accurate research which is expressedin the reports that you see . >> how does thiscompare to the peers in terms of how they performed over the last year . >> our returns over the past five years right in the top five percent versus our peers. even as our volatility rate in the lowest eight percent. and our risk-adjustedreturns right in the top two percent . >> you talk about your objectives. how often do youevaluate the objectives and risk. that you're taking . is it at a majority basis or every five years? >> i would say it's an iterative ongoingprocess but it's also strategic .

so we conduct what our expected returns on bonds to publicly traded stocks to markets. the, what the expected volatility of those asset classes are with the relationship to their returns or the correlationsof their returns are expected to be . formally, the process is done every three years is what the board sees. in practice is much more vigorous than that.>> any additional questions. if not, thank you so much mister for your report. as this time i will open the phone lines for public comment. this is an suggested item only really iq colors. if you have not done so press

star three. do we have any colors online ? >> madam secretary, there is one calleron the line . >> iq. please take your name and begin when youspeak . >> this is fred from protect our benefits. mister keane can't overlook such an outstanding key investment officer report. it's extraordinary.i mean, i know it's unusual times in the market but there's been a lot of financial planners and othe investment . pension funds and stuff that done nearly as well. so salute to not only build poker but his team and the staff and everybody works

together . it's extraordinary and it's representing retired people a lot . it will be over 100 percent funded, and you all know what that means tosome people . to be 110 percent funded, that wasn't supposed to happen for a number of years so from the bottom of many people's hearts we thank youand salute you . >> thank you caller. do we haveany further calls ? >> there are no more colors on theline . >> hearing no calls, public comment isnow closed . >> can you hear me?if you can hear me, not your head. >> president bridges: we can hear you. >> to speak i have to pull out a headset but then i cannothear

you so that's why i spoke that way . i'm going to ask a question or give mister coker heads up on what he resented. the investment committee meeting question i like you to be prepared to answer since we have a high funding ratio level is whether or not we should consider immunizing the portfolio against liabilities. i'm going to ask that question at the investment committee meetingnext month . thisis what insurance companies do when we get to this point . thank you. >> president bridges: thank yo commissioner driscoll . madam secretary, can you call the next item please. >> item number 10, discussion item, sf dp managerial board . >> president bridges: thank you so much.

>> good afternoon commissioners, can you hear me? >> yes we can. >> thank you. it's pretty hard to follow mister coker's excellent cio report but i will do my best. as you know the ss pcp is a voluntary plan and so our assets are not quite close to the 34 billion but we are at almost 5 billion and wanted to give high level overview of the plan so that we can go over the monthly board report, particularly because we have a new commissioner. welcome on this board. with that said i'd like to turn to the monthly activity report included in your materials and i'm going to walkthrough at a high level in less thanfive minutes . if that's okay withpresident

bridges .>> president bridges: please proceed . >> thank you. going to the first page this is basically alineup of all our investments . you can see we have close to about 5billion in assets . these arevoluntary dollars . if there's any additional money that our employees have chosen to put away for their retirement to compliment anything theyexpect to receive .>>.

our staff works very closely with our record keeper. we have five councillors that we employ through the record keeper. and their job is to be boots on the ground. their job is to go into the departments and introduce themselves and tell people about

the plan. what happens is in the past it's very difficult for city employees to -- for lack of a better words, trust an outsider, right. our employees are more understanding that this is truly a benefit, that it's for them. and it's not, you know, something that is presented with any other goal, except to make them right, more financially secure. that's off the cuff. any other comments or questions? okay.

thank you so much for the deferred comp report. thank you. thanks to you and your team for all of your hard work. this is a discussion item only, madam secretary. please open the phone lines for public comment. >> clerk: thank you. a reminder to any callers if they have not already done so, press star 3 to be added to the queue. >> moderator: madam secretary, there are no callers on the line. callers on the public comment is now closed. >> thank you, madam secretary. next item, please. >> clerk: item number 11. >> thank you so much. executive director. >> commissioners, this is a report out from the government's committee and it's november 2020 governance committee meeting. the chair of the committee

requested that the board's fiduciary governance committee work towards a statement. they reported back on the may 2021 governance committee, there were various models that we wanted the committee to be aware of, and to consider. and that we had basically a recommendation from the consultant to develop a short aspirational statement, similar to the vision statements that we see other california public plans have adopted. also the governance consultant was careful to distinguish the vision statement from the mission statement of the organization. at the end of that discussion, the governance committee voted to recommend to the full board, the following vision statement, with a recommendation from the committee that the board approve and adopt it.

and that we start publishing it, not only on our website, but in other future publications. the vision statement that the committee is recommending is the vision of the san francisco employees' retirement system is to be trusted, leading edge, financially sound, well governed, dependable, ethical and transparent pension plan. and with that again it's the recommendation of the governance committee that the board adopt this vision statement. i'd be happy to answer any questions. chair driscoll obviously. >> commissioner, as chair of the committee, do you have any additional comments on this recommendation? >> i had to make sure that you could hear me. >> yes, i can hear you. >> okay. good. i can't -- now i can't hear you.

okay. here we go. jay expressed clearly how the vision statement was created with diane's help and why we're recommending it. the small piece of the puzzle that you don't see yet, that hopefully will come back in the neck several month -- next several months. there's another thing called the purpose statement, which needs to come from the bottom up. because it is how all of the staff on the service side, not just the investment inside, that our members really rely and depend on to meet their needs. so that purpose statement and how we execute and achieve what our mission and values are all about. those are more words. but hopefully it's -- they're not just words that appear on our stationary or website, but the culture that the executive director is responsible for leading and managing, that purpose statement will then help

all of our employees at sfers understand how we're trying to do things. it focuses more on the how than simply the what and the why, which division statement and the mission statement are all about. that's anence of what we were trying to accomplish by reaching out to develop a mission statement. thank you. >> thank you, commissioner driscoll. if we can hear them at this time. >> i'll make a motion -- i'll make a motion to adopt division statement. >> i'll second it. i'll second. >> thank you. it has been moved and seconded that we adopt the recommended

vision statement from the governance committee. madam secretary, please ask for public comment. >> clerk: thank you. callers, if you have not already done so, to press star 3 to be added to the queue. moderator, do we have any callers on the line? >> moderator: madam secretary, there are no callers on the line. >> clerk: hearing no calls, public comment is now closed. >> thank you, madam secretary. roll call vote, please. >> clerk: yes. [roll call]

>> clerk: we do have six ayes. motion passes. >> thank you very much. and thank you to the governance committee for working on this and we'll -- look forward to hearing the rest of the committee report a little later. thank you, commissioner driscoll, and to the governance committee. madam secretary, next item, please. >> clerk: item number 12, discussion item. educational presentation on fiduciary duties. >> thank you so much. at this time i'll turn it to the executive director to introduce this item. >> i need to unmute and start my video. the governance policies provide that the board -- again -- [inaudible] in the past, we have

requested the city attorney's office and today we have deputy city attorney robert -- [inaudible]. presenting a segment of fiduciary training and then usually these are every six months. this has been delayed. but i will now turn it over to robert brian. >> thank you. can you set me to sharing. >> clerk: moderator, can you pass the ball? >> give us the ball. >> clerk: you should be set now. >> yes, i see it. one second.

i hope you can hear me. i think you can see me, i can't see you in my current mode. hopefully you can hear me? >> clerk: yes, we can hear you fine. we have the representation up. thank you, robert. >> excellent. this is a review of the fiduciary duties for the retirement board. and many of you have heard much of this before. and not much has changed, but it is worth reviewing from time to time as the executive director pointed out. this presentation will basically address three subjects, what is a fiduciary, what are the four

basic duties of a planned fiduciary, the relegation of fiduciary duty. so the most useful, helpful definitions of a fiduciary can be found in the employees' retirement insurance security act and the internal revenue code. and the definition there instead of fiduciary is any person to exercises discretionary authority or control of management or grant assets. renders investment advice for a fee or compensation or secondary authority or responsibility for planned administration. essentially if you have to put discretion over an administration or investment, you're a fiduciary and you must contact in accordance with the fiduciary standards. so in a fiduciary function, your job description or your contract terms may not identify you as a fiduciary. if you do the things by

definition to make you a fiduciary, then you become one. and so it's important for those who, within the staff who were not expecting to be fiduciaries, not act like fiduciaries. and it's important to remember that appointing a fiduciary makes you a fiduciary to that appointment. you basically must monitor the performance of the delagee and make the appointment in accordance with the duties, that meets fiduciary standards. so there are some examples of fiduciaries, that we commonly know. the board and its committees are fiduciaries. and individual members of the board and investment in benefits staff are also fiduciaries. and investment managers are sometimes hired to make fiduciary decisions on our behalf. and examples of nonfiduciaries.

the biggest example is the settler of a plan, the creator of a benefit plans, the city and county of san francisco. the city is not making discretionary decisions regarding administration of the plans or investment of assets, but the city is creating the plans. and record keepers who have ministerial duties only, with regards to records, are in similar position. and attorneys, auditors are also given advice or actual findings, but are not making discretionary decisions in regards to the plan. so what are the four basic duties of a planned fiduciary? and these duties can be found in the state constitution and the charter. and we start with the

constitution, which is based on the board. we start there and then the charter, article 12 or the city charter does the same thing. so the four basic duties are, that we'll find in those bodies of law, are duty of loyalty, also known as the exclusive benefit rule, duty of prudence, also known as prudent expert standard. the duty to diversify plan assets and the duty to meet the terms of the equitable law. so the duty of loyalty. it's stated in the state constitution and to satisfy this duty fiduciaries -- for the exclusive purposes of providing benefits to participants and their members of the

beneficiaries. this part of that duty is reflected in the charter as well. the next part of the duty, minimizing employee and employer contributions in administering the charter, but not within the constitution. so it is our obligation to satisfy. now this duty -- the duty of loyalty you could the constitution, it takes precedent over any other duty that you have as fiduciaries. obviously it's extremely important. to satisfy the duty, we may not as fiduciaries place fiduciary's interests, the plan sponsor's interest, the unions or constituent's interests and third parties interests ahead of the interests of beneficiaries. so basically you must have one thing in mind, which is what in the best interest of planned participants and beneficiaries. this is basically a conflict of interest rule.

you should not have a competing interest with the interest of the plan when making a plan decision that's a fiduciary obligation. so let's look at a hypothetical. hypotheticals are often good for helping us understand rules. so alexis is a member of the retirement board. alexis' spouse is an employee. investment l.p. invests in a company with space technology. and would help to diversify the pension fund assets. in closed session, alexis with all other board members voted to place up to $70 million of investment of that. board members not to disclose their closed session discussion or vote. so the question here, we'll stay with the example a, before we go to example b. the question is is there a

breach of the duty of loyalty? if the red flag here is alexis' spouse is an employee of investment company, investment l.p. and so alexis has loyalty to alexis' spouse and we might know that that interest in the spouse's position might also be a financial one and that the spouse is receiving an income from her employer. so that's -- that in almost certainty would be deemed conflict of interest. and if alexis voted and alexis breached the duty of loyalty. there's another layer to this hypothetical that gives me a chance to just briefly review government code section 10090, which prohibits the board from taking any action on a contract, in which any board member has a financial interest. this might fit that category.

because alexis' spouse is receiving the money from her employer, and yet alexis is taking a vote and the board with alexis has taken a vote on the contract. so we have to be very mindful of that situation. so there are two issues in this one item. let's assume that 1090 was not an issue here. the board voted and the investment transaction was under way. go to example b. hypothetical bwith one week after the board approved the investment, but before the investment transaction closed, ralph, a board member, was being interviewed by investment stars magazine for an article featuring his contributions to the retirement system. ralph disclosed to the stars magazine the retirement board's vote in closed session for the article. was there a breach of loyalty

here? the magazine was interested in interviewing ralph to feature his contributions. there seems to be a personal conflict of interest here in ralph interviewing with the magazine. and so this is also likely a case of an inappropriate conflict of interest. ralph is not necessarily acting in the best interest of the plan. and the board voted not to disclose. so one would assume that the board, in keeping the plan interest at plan, had a good reason for not discolleagues -- disclosing the vote. it may interfere with the transaction. it might stop the ability to close the transaction. so ralph had interest here in all likelihood. the other issue in this hypothetical, b, of course, is the vote not to disclose. and ralph's error is acting contrary to the vote. that could be deemed official

misconduct, which could be from his position. so the process to important situations that i think we have to be mindful of. i will add that the liability for breaching the duty of -- the fiduciary duty is personal generally, which is to say that the fiduciary couldn't be held personally liable for the damages caused by the breach. but you're a public agency. and the city would very likely, as it generally does, indemnify you if you act within the color and scope of your duty. people are acting within the color and scope of their duty, because they were -- because they could be said to be pursuing personal interests, not the interests of the city or the funds. [ please stand by ]

that acting in good faith or

underway because you think that you have a good motive in taking an action and that's not enough. you can act in good faith and still reach the duty of prudence. for example, you may have a board member who is sympathetic to a member who is not eligible for a disability pension but because they might go bankrupt without a disability pension or because the board member's family is in a bad situation otherwise. this board member instructs staff to grant a disability precipitation. the idea, the motivations are all good and the board member is pushing staff to approve a pension that's inconsistent with the requires of the pension plan. that is i am prudent and a breach of the fiduciary duty. you have a wide breadth of responsibilities and topics to

cover you can't always be experts. you may consult an expert. when you consult an expert and take into consideration that are add vis from the expert, you are responsible for the decision you make. so, the duty of prudence does not require you to guarantee an outcome or require a feud process and it's basically underscoring the need to document your decision-making to show, to show, that you have a prudent process and it's prudent outcome and no process more

likely to lead to haphazard outcome. with a hypothetical on this duty. and retirement board was in search of an investment adviser who acted as fiduciary. staff recommended the board retain luminary consulting and staff did not and time and work and investments recommended by luminary loss and the other grew by 10% during the same period. so, was there a breach of a duty of prudence? there are going to be many questions asked when an allegation of a breech of a duty of breweddens is made and it's all going to be fact-based it

making decided. why did staff recommend a luminary? it luminary's skills weren't retain particular? would a competitive process have helped? why not have one? they're all pro pro at factors and these are the types of questions that would be asked and investigated to make the decision what does it look likes? acting consistent with the laws and plans governance documents and which includes board policies and procedures and to the ex at any time, having systematic monitoring of the performance to ensure the del a gee is meeting the fiduciary responsibility and documents decision-making and documentation that shows what was considered and where did you

get information from, your sources, whom did you speak? what experts, for example. maybe experts that were interviewed and what were your conclusions. there are common documents that help us to document this and the agenda, staff and consultants suppose sorting materials and minutes and these are all things commonly available to help with document procedural prudent procedures. so they've gotten in trouble but not doing what the laws and the governance documents say they should be do. they will be reviewed and updated and having no record of what was considered and who was consulted. and having no record of what it looked like. the biggest concern again is not being able to support what was

done with documentation. >> the next duty is to diversify and it's only found in the constitution. one could argue it's a duty that fits on the dude of prudence but under the constitution, it's a duty to diversify the investment of the system and it's minimizing risk of loss and rate of return. unless it's clearly not prudent to do so and of course i found that the duty to diversify cannot be determined for some formula and it's not new member

numericalor counting stones, ita condition that determines by many facts and circumstances that are in place when decisions are being made. i have said this before and i'll say it again, arisa, of course, is a private retirement plan and it doesn't apply to us but the fiduciary standards closely have the standards and the constitution and the character and so, the analysis of these duties under arisa be can be helpful to us and useful guidelines. so, diversification is generally considered based on the plans entire portfolio but to get there, you would have to give and and here are the factors

that the case look at or some of the factors that the cases look at in trying to determine whether or not they are diversified. the purposes of the plan, the amount of the plan assets, financial industrial conditions, the type of investments, and mortgages, responded or stocks .it's in accordance of the plan documents and law and this is a common law principle you find it in the california state courts and the public printed grant and it will all the period of trust. you must follow the laws that

applies to the plan if you are going to and it falls within the duty of prudence and the board members urging statement of pension benefits and it's an example that someone not calling the plan rules or plan terms and app liberal able laws. this could very well fall under the duty of prudence as well. so, we know that the settle ler and they do not have the responsibility to satisfy the fiduciary duties and where as, you as board members would and and the settler is someone who created the trust.

so, settler functions, you too encloud adoption amendment and determine enation of planned terms and the third composition plan is set up by city ordinance and the city could make changes to what you could do regarding that. by amending those ordinance and the authority byway of the character to do that. and some officers of the plan may wear both hats and they may sometimes be settler and we have a board members on the board of supervisors and sometimes sometimes they are on the board of us and he is wearing a hat of a settler and he has the

fiduciary responsibility. so, we have to touch on the point that a is theeler is not obligated to consider the interest of planned participants and can act in the interest of the settler and modifying the plan. the city could take into consideration, financial burden on the city and making changes or could simply want to attract more employees to the city and drive the make other decisions and but so it's perfect example, the city added their own retirement window to our plan, whether it's the sfdp for example and then the

implementation of that would and importantly informing member out at the windows there and how to take it and that is part of our fiduciary duty. so, what are examples of fiduciary decisions? on the left, we are examples of settler actions and as we said, most of those, all of those have to do with changing the plan. planned terms or ending the plan and under the right of fiduciary actions, which involves various sorts of dis correction ary judgment, for a direction and monitoring of plan investments, a planned service providers and third expenditure of planned assets, including of fees and expenses and time and delivery and all of these must be done with the highest duty of care meeting the dude of prudence and

loyalty. let's talk briefly about delegation. because of the scope of your work, the complexity of it all, it's important you have the a lot to delegate authority and to the extent the board or delegates to staff and staff is obligated to meet the fiduciary standards of the character and the constitution. and it's haifa dash aor' function so when doing so, you must meet the duty of loyalty and the brewed expert standard. we've also talked about the fact you would need to have on going

monitoring of fiduciary when authorized is delegated. but still the principle applies to other service providers because they are obviously providing something to you services to you that you need to help you make good fiduciary judgment that's is important to monitor, all service providers there are tools to do these things to hire good service providers. r.f.p.s and r.f.i.s request for information and one technique to help us ensure that we're hiring the best that is available and systematic performance and peer reviews and fees are a touchy point. there's something that are often sued over because of the fees to

the plan are too high or the fees to members and using it as an example might be too high and those would be the allegations. use of standard agreements with investment managers and consultants as a risk management tool. this is a way to make negotiations more efficient and to help ensure that we get our best terms cross to service providers. and we'll tools and monitoring such as reporting meetings and watching these procedures. i think that ends the review of the fiduciary responsibility. do we have any questions? >> are there any questions on our fiduciary responsibility? >> yes, i have questions. >> i can see you but i can't hear you. can you hear snow.

>> i can hear you, so please proceed. >> if you nod your head, i'll see it. page 24, robert. i just want to make sure that i understand, it's obviously applies to the constitution, the city charter, i assume the administrative code inconceive blee m.o.u. contracts that affect us and that correct? >> next level of documents that's do with our terms of reference, our investment policy and belief statement, which has procedures in it, and any other resolution that's we adopt? are we obligated to follow them and our staff when we delegate to them? >> yes, you are, you certainly

should. to the extent you have inconsistent resolutions, it's important to correct that. yes, the idea is you are adopting the protocols and policies that telehealth to your ability to meet your fiduciary responsibility so you should be following them and removing any consistency when you review them. remember, i can't see you. is there another question? >> commissioner driscoll. >> is the board obligated to use a competitive process when we're getting ready to make a decision on some major need, as asset, we do a lot of different decisions. are we obligated to use a competitive process? >> you are not obligated on any

law that you have a competitive process and you have to poll your policy in regards to that and no, you are not obligated by-law to do it and you have your service providers, you have an option not to if certain conditions are met. but there's nothing lawfully that -- >> are staff obligated to use a competitive process or consider alternatives if there are any such alternatives for whatever project search, whatever we delegated to them in order to bring a recommendation back to the board? >> to the extent, they're not

this is your terms of reference which sets a competitive process requirement for certain service providers, no, there's no other obligation and it will follow your term of reference. if something is outside the scope of your terms and reference, there's no clear obligation. if following competitive process it's something that would help that one could argue would be the best way to help staff to make the decision then they can do that but there's nothing that object la gates to do it other than meeting the duty of prudence. they may decide they don't need to do it and your term of reference doesn't require it and they have other information that leads them to be there's only one person that can provide, that can provide the service or answer the questions that you

want. they should be able to justify why there's no need for it. there are flexibility -- there was a term of resolution or process described and it was not followed, whether or not it was conducted sips the board a proves things, whether or not the board was prude apartment. prudent.thank you for the prese. >> the board can always changes its policies and procedures if the board thinks that perhaps it could be something else would be more prudent than what it previously approved. that's why the board periodically reviews the terms of reference and other policies. >> thank you, commissioner driscoll do you have additional questions? >> ok.

other commissioners, do you have any questions for mr. brian and our fiduciary responsibility? this was a discussion item and i would like to thank you for pour duties and responsibilities of the board so thank you mr. brian. >> thank you, madam president. >> is there any public comment on this discussion item. >> clerk: thank you, a reminder to callers if they have not already done so to press star 3 to be added to the queue. are there any callers on the line? >> there are no callers on the

line. >> public comment is now closed. president bridges. >> thank you, madam secretary. next item, please. >> next item, number 13, discussion item, personnel committee reports, i do have one correction on the report. the title should reference personnel committee not investment committee. president bridges. >> thank you, madam secretary. commissioner stansbury. >> i don't think the committee has anything to report out other than our public' noticed meetings. >> thank you so much. this is a discussion item only. if there's nothing else, please open the phone lines. do you have any questions for commissioner stansbury? if not, we'll open the phone lines for public comment on this discussion item. >> thank you, moderators, do we

have any callers on the line. >> clerk: madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. president bridges. >> thank you, madam secretary. next item, please. >> item number 14, discussion item. governance committee report. there is also one correction on this report that title the chair should read governance committee not investment committee. president bridges. >> thank you, madam secretary, commissioner driscoll, governance committee reports. >> the terms reference that we voted on several minutes ago was one result. the next governance committee meeting has not been set yet because we have to come back and look at our minutes as well as the motion that we adopted has still not got into, i would say final, final form so we hopefully will have actions

possible actions to recommend it for the july meeting. we had a very long meeting talking about a number of issues to have a function that would happen in the investment commitment meeting and other issues about improving our decision-making process. so, more to follow at next board meeting assuming the governance committee can meet before then. >> thank you so much, commissioner driscoll. board members, are there any questions for commissioners driscoll on the governance committee report? >> commissioner bridges, i just want to make -- >> i hear you, yes. >> the only thing i would say is we're under a -- we are in a period of what i would call enormous change and before we start making changes to

policies, anything that is dope structurally, it would be wise for us to wait until we have some of these new positions filled and we complete the executive director search before we contemplate any large changes. >> fellow board members. the item that was brought to the governance committee was submitted by staff to the president of the board. it was then delegated to me without any additional instructions. i've handled this best i can without any additional input from anybody other than the two committee members. only of two us actual low spoke on the matter. so i don't plan onrushing anything but we're asking a lot of questions and trying to figuring out, going forward, improving all our processes which is relating to the decision making and a lot of it relates to investments and and

how the mayor's office will be expanding our budget and for purchasing of bring on professionals and other high-level service oriented people as well as what the personnel committee is doing with its major projects. the governance but this was delivered to us meaning the governance committee. i have to plug in so i can hear any other comments. >> they're not directed towards him and i'm not trying to rush into it. and i just think that we're in a situation similar to when we were rolling out our return strategy and i want today make a point that i think it's important we don't rush through

it. not rush but we just wait until some of these other big changes are in place. >> says he said, everything is on the review and all the recommendation also come back to the board anyway. >> that's what i said many of it's approved by the board. that's one and two. one or two of these significant items go back to the retreat where he was helping us deal with some of these issues and so some of these ideas that have been floating they have to go in a good sequence which means the executive director that decision

and to the think. >> any comments or concerns on governance? >> does that clarify your concern? >> i understand the process, i just wanted to ask for an observation. is there no more concerns or questions for commissioner driscoll and the governance committee this is a discussion item and i will open the phone lines for public comment. >> thank you, callers. if you have already done so press star 3 to be added to the queue. are there any callers on the line? >> madam secretary, there are no

callers on the line. >> thank you, hearing no calls, public comment is now closed. president bridges. >> thank you madam secretary. next item, please. >> item number 15, action item. adoption of the july 1, 2020 funding and evaluation report. >> last month we did discuss the results of the july 1, 2020 and the board adopted for 21-22 fiscal year and this is the vote on the package and i have a couple brief highlights. i'd like to note the boost july 2010 now comprise 53% of our active and last year it was short of 50% and section 2 of the report is a very important section and it discloses risk and they have identified including investment risk, interest rate risk, and the

risks that the cost for future supplemental could be unaffordable and these results in discussed last month and i did ask bill to stand by and in case the board has any further questions and i should add that i am always available to answer questions at any time. >> board members, are there any questions or concerns regarding the funding evaluation report? if not, this is an action item and i entertain a motion. >> i'll move to approve. >> i'll second that.

>> moved by commission and second by commissioner that we adapt staff recommendations and as of july 1st, 2020 funding evaluation report, madam secretary, please open the phones to public comment. >> thank you. a reminder to any callers to press star 3 to be added to the queue. moderator, are there any callers on the line? >> adam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. press bridges. >> thank you, madam secretary, col call vote, please. >> clerk: [roll call vote]

are you waiting for me to vote again? >> i vote aye. if you can see me i got my. >> aye. >> thank you we have six ayes motion passes. deferred and terms of reference and monitoring and reporting policy, executive director and performance evaluation policy

and strategic planning policy and fast forward communications policy. president bridges. >> thank you, madam secretary. at this time, i would turn to a director and for this presentation. >> members of the board, as point the out in the memo the retirement board poll sees and sort of what he was requires a regular and of board policies and so these are the reviews are done initially in the governance committee so this is a report out from two governance committees and the first one being on november in 2020 where the governance committee reviewed the governance committee terms of reference that the deferred compensation and the monitoring and reporting policy and the executive director performance policy and the strategic planning policy as a normal review and from that meeting, all they did was update

the fact that they had reviewed the following three policies and the governance committee in terms of reference and deferred compensation information from

staff and more clear the process and the attracting process and it was staff's recommendation the section be educated to the policy that basically covers board information request from information from staff and i'll read it because it's brief. board members shall submit all

requests from staff which require research of gathering of information in writing to management, for example, executive director and the for consideration or action. for tracking purposes all request for information from staff should be copied to the board secretary who will align a tracking number, monitor report on the processing of these requests. this policy does not include routine request inform readily available information. management shall provide the semi annual report on the board and on the process and the board members request for information covered by the policy. with that, i don't know if chair driscoll wants to add anything but it's mostly routine,

substantive issue was the addition of a new section to the board of communication policies and the committee's recommendation is that the board approve changes to all six of these policies and with that i'll be happy to answer any questions. >> would you like to add anything? >> nothing significant to add but i want to underscore the issue about the communications policy and adding section 14 was to help track better request for information on how they executive with the staff and thank you. >> thank you commissioner driscoll and executive director. board members, do you have if i questions or concerns for either regarding the recommendations?

this is an action item. >> if no one has any objections i would move to approve. >> thank you, commissioner. >> i'll second it. >> it has been moved by commissioner and second that we approve the recommendation of amendments and updates to the following board policy. a of terms of reference, the compensation committee terms of reference, monitoring and reporting policy, g, executive director performance evaluation policy and strategic planning policy and board communications policy. madam secretary, please open the phone lines for public comment. >> clerk: thank you, callers. please press star 3. moderator, are there any callers on the line? >> madam secretary, there are no

callers on the line. >> clerk: thank you hearing no calls, public comment is now closed. president bridges -- >> thank you madam s a role call vote, please. [roll call vote] can i accept a thumbs-up? can we get an oral from him? >> can you plug in and say aye? >> clerk: can we accept a thumbs-up?

>> clerk: [roll call vote] >> i'm terribly sorry but i lost connections for last minute. what are we voting on? >> the approval of governance committee amendments on the board policies. >> to any of those affect investment-making decisions?

>> madam secretary, next item, please. >> item 17, discussion idea. executive director report. >> goods afternoon the only item was a budget updated related to

our hearings before the board of supervisors but i wanted to publicly state that the mayor issued or presented her budget on june 1st and i'm very pleased to announcement the investment positions the resources the environment board supported in our budget have been approved and are included in the mayor's budget. we're so lucky completely on the administrative non investment side of the house, however, we were able to get much needed resources from the mayor's budget. the process now is that we're in negotiations with the board of supervisors budget annalist, the harry rose house that has been working with the board of supervisors and basically

looking for ways to improve the budget and provide money fort board of supervisors to have some discretion on how to spend it. even though we are not general fund meaning anything that is cut from our budget, cannot be used for any other city purpose. we still go through the process and i've been getting e-mails during the meeting where they're asking for additional information so we're hopeful that we don't have a final decision as to what our budget will look like once it goes to

for cuts restored and i'm hopeful we will be successful but the final date that we can have a settled and figured, fully negotiated budget and the board of supervisors will at least make a committee decision on the department budget is the following wednesday which is june 23rd. so it's crunch time for the budget and i want to give you an update and make sure you understand that all the efforts and a lot of board members have made as well as staff's outreach to the mayor's office resulted in us getting the investment resources that we have requested and that the board had approved. thank you all for your efforts. with that i'll answer questions or if we have any other questions related to any other items. >> thank you, executive director. and is there any questions for

out deputy director? if not, this is a discussion item. if can you open the phone lines for public comment. >> a reminder to press star 3 to be added to the cue. moderator, do we have the callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. president bridges. >> thank you, madam secretary. at this time, i will transition the meeting to our vice president and i will relinquish my seat as president and trans mission of the meeting. >> thank you, very much. at this time, i'd like to call items number 18 and 19 together.

>> clerk: 18 and 19' elections of board

>> thank you for the nominations. i'll go with aye. >> thank you. >> like it's a surprise. >> clerk: [roll call vote]

>> clerk: we have six ayes, motion passes. >> thank you, very much. would you call the next item, item 20. >> thank you. item number 20, discussion item, retirement board members. >> this time i would like to thank outgoing president bridges for her service to the board this past year and i would like to thank her for the teamwork exhibited and working together. thank you, very much. >> thank you vice president and may i speak at this time if possible? >> go ahead. >> thank you president.

i must say i'm grateful and humble to have served of president for this past year. it was a challenging during a global pandemic but the first staff and consultants and i'm pleased the committee convened to discuss the business of the retirement system and we performed our responsibilities and an excellent matter and i'm pleased with that so i thank each of you and i'm grateful. i salute the board and my vice president at the time, who i worked closely with so thank you, very much. our executive director administrative and operations teams i thank you and investment team, city attorney, consultants and our technology team, grace, craig and paul, you are the best. and last but not least, our rock

and the glue for the entire system our extraordinary board secretary, darlene, thank you, very much. thank you for support. i look forward to working with president as we is our responsibility of the system. thank you very much and thank you to all. thank you for yielding your time, mr. president. >> thank you. at this time, public comment. >> clerk: thank you. moderator, do we have any callers on the line? >> madam secretary, there's one

caller on the line. >> clerk: thank you. caller, please state your name, your two minutes begins when you speak. >> my name is fred sanchez with protect our benefits. sorry for getting in late. i wanted to thank commissioner bridges on the way she always conducted a first-class meetings, wonderful. god, yeah, very refreshing, great job to the president. to the new inductees we hope to work with you both. to my favorite supervisor on the board, ahsha, congratulations and you know, i know you will continue after commissioner bridges has done a great job i'm sure but just like to work with you and god, if every board was

like the retirement board, we'd be a lucky san francisco. thank you. >> thank you, caller. moderator, do we have any further calls. >> madam secretary, there are no more callers on the line. >> clerk: hearing no calls. public comment is now closed. >> ok, motion to adjourn is in order. >> so moved. >> moved by commissioner. do we have a second? >> second. >> thank you commissioner bridges. ok. call the roll, please. >> clerk: i don't believe there's a vote required for adjournment. >> it's not an action item. we should be adjourning. >> ok.

we'll consider the meeting adjourned. thank you, very much, everyone. >> there's a new holiday shopping tradition, and shop and dine in the 49 is inviting everyone to join and buy black friday. now more than ever, ever dollar that you spend locally supports small businesses and helps entrepreneurs and the community to thrive.

this holiday season and year-round, make your dollar matter and buy black. good morning. the meeting will come to order. welcome to the thursday, june 10th public safety and neighborhood services committee. i'm joined by vice chair catherine stefani and i'd also like to thank sfgov for showing this meeting. >> clerk: the board recognizes that public access to city service is essential. first, public comment will be available for each item on this agenda either channel 26, 76,