Ilene bovin coalition for San Francisco neighborhoods here on my own behalf. On the overhead is the proposal for the 2019 Building Code update. It was presented at the Capital Planning committee on july 22 of this year. In its presentation, the department of the environment stated that 35 of the citys emissions today is from privatesector natural gas. To reduce these emissions, the proposal is to encourage all electric design in new construction. The timeline for this proposal is for review by the department of building inspection and Code Advisory Committee in august, the board of supervisors Land Use Committee in september, and the full board in october. While not in the department of the environment presentation, the Capital PlanningCommittee Members expressed concerns. With increased reliance on electricity, the issue of reliability was raised. The response was possible use of Battery Storage for electricity. Although not specifically related to this presentation, the issue of undergrounding was raised. With the risk of blown transformers and downed power lines, the undergrounding of utility wires should be considered as well. With pg e in bankruptcy, i would urge the sf puc, and the board to replace storage batteries and the undergrounding of lines on the table. In response to pg e, the west side has lots of gophers. The sand dunes are their native habitat. We shouldnt put in undergrounding without concern for the gophers. District 1 district 4. Supervisor fewer yes, i know i have gophers in my back yard. Does the Committee Want a copy of this . Supervisor fewer yes, thank you very much. Okay. Supervisor fewer thank you. Next speaker, please. Yes, next speaker, please. Can i have the overhead, please. Thank you, supervisors, particularly stefani for showing up and fewer and stefani for proposing this legislation and supervisor walton. Thank you very much for hearing this important safety issue today. My name is richard cardello. Im a board member of russian members and a long supporter of the San Francisco coalition to underground utilities. Really, thank you for bringing this up and ive learned a lot today. Thank you for calling the speakers. Sadly, were all too aware of the recent devastating fires contributed to downed power lines which resulted in a great loss of life and property. The existence of the very many remaining overhead wires in San Francisco makes the everpresent danger of an impending earthquake that much more ominous. I wonder if all these wires are still in active use or if many have been abandoned. I learned what the definition of abandoned means now, it means nothing. Supervisor fewer yeah. Im also concerned about the potential interference with fire safety and if the Fire Department is unable to use their ladders in some cases because of the interference of overhead wires. I was first attracted to the cause of undergrounding for esthetic reasons. Ive grown to appreciate that the tangles of wires above our heads also represent an extreme hazard for residents and visitors to our city. Please move to remove this danger over us. Thank you so much supervisor fewer thank you very much, sir. I need three hands. Oh, dear. Wait a minute. Thank you, supervisors, for hosting this hearing today. I am the chairman of the San Francisco coalition to underground utilities. In addressing the proliferation of wires, poles, and equipment in the 45 of our city that is endangered by its existence, it is only right to point out that you address today only a portion of the citys residents, as more than half the city enjoys undergrounded utilities and its paralleled increased safety. It is therefore doubly important to bring parity to the rest of your constituents. As telecom saddles every single american pole with new equipment by order of the middle class tax act of 2012, pole heights are being raised, increased 4 to 7 feet, changing the relationship of existing wires to both poles and adjacent properties, creating swinging, sagging boxes and wires which then are blithely controlled with duct tape, if at all. This duct tape was applied in february of 2016, pg e apparently reviewed these poles annually. This duct tape has been there now three years. By dpw permit requirement, telecom must attach its new equipment in a neat and orderly condition without excess loops. But with no requirement to refrain from making existing wires worse. An interim solution prior to undergrounding is obvious to me. Telecom [ indiscernible ] [microphone not activated]. Clerk the speakers time is concluded. Supervisor fewer thank you very much. Thank you. Next speaker, please. Good morning, supervisors. Thank you for having this hearing. My name is mark snider. Im a resident of district 8 and a member of the San Francisco coalition of underground utilities steering committee. Were a city at risk for earthquakes, and a strong earthquake will certainly topple utility poles. Residents and tourists alike will risk injury and death from falling poles, but the wires on the street will also present a risk in that fire and emergency vehicles will not cross wires that they cannot pass without knowing that theyre safe to pass. The solution clearly is undergrounding. Its not rocket science, but it does involve engineering. There are some updates in a localization of underground facilities and utilities, and there are also updates in creating conduits without trenching. Both of these have potential for cost savings. Undergrounding will help our city become safer and more resilient, more beautiful, and its an investment that will be spread out over years and recouped those reasonable Franchise Fees on the utilities that share the conduits. Heres what i think has to be done. I hope you will assert your authority into the removal of nonfunctioning wires. I hope you legislate the digonce approach, so there will be more undergrounding when streets are dug for other purposes. I hope you will look at the Franchise Deal with pg e now that theyre in bankruptcy and look at a municipalized system. Fully fund the master plan for undergrounding and support changes to the rule 28 program that have been discussed. Thank you very much supervisor fewer thank you very much. Next speaker, please. Good morning, my name is steven edwards. Im also a member of the San Francisco coalition of underground utilities. I live in district 8. I wanted to point out what seems to me a huge discrepancy between the what we heard this morning in this hearing and what we see on the streets. The speakers from the telecoms and from pg e this morning emphasized and went into considerable detail about the protocols that they use in order to coordinate amongst themselves and how they ensure that each of the various steps are taken to make sure that things are installed on poles, that theyre safe, that theyre earthquake safe and so on. And yet, the reality before our eyes that you see over here, this is what it really looks like. This is not what we heard. All this stuff, the tape, you see the cut bits there that you see hanging down, theyre using these not poles, but the wires themselves to store large heavy coils of cable. I heard no one say that any form of academic or Scientific Study has been done on the risks of these hanging things swinging in an earthquake. So my question to you would be would you be able to find out what would happen in a 7. 0 earthquake with all of this swinging material . Thank you very much supervisor fewer thank you very much. Next speaker, please. My name is david bancroft. Im a resident of district 2 and i too am a board member of the San Francisco coalition of underground utilities. I want to talk about two things. First i want to clear up sort of a little bit of fog that we generated today about rule 20, to make two essential points. Number one, that obviously what is going on here by the way, rule 20 funds are generated by a charge to our utility bills, so everybody. So essentially whats been going on here for the last 12, 14 years is we, those who dont have undergrounding, have been paying for paying out of our utility bills for those people who have undergrounding. This drove our coalition to not try to find certain sections of the city that would get undergrounded, but the only equitable thing to be done is to have citywide undergrounding which is the master plan. On the issue of is undergrounding better to leave the wires up, 100,000 frenchmen cant be wrong. San diego is doing this at 12 to 15 miles a year and have been doing it for the last 10 or 12 years. Santa barbara is doing it. Berkley has commissioned a study to underground if theyre going to be doing it. I mean, the proof in the pudding is very much in the knowing here. Not only as supervisor mandelman pointed out, is it common sense, but the techniques are available, the cost can be controlled and we urge you to push for a master plan after telemon reports on its initial overview for a master plan. Thank you very much. Supervisor fewer thank you very much, sir. Thank you for covering this issue. My name is lindsy phillips. I am a member of the San Francisco coalition of underground utilities. I live for the past 30 years in a 100yearold building on russian hill. There are six poles on my block. I look at them out my windows with the recently added extensions holding all of the gear for the telecom industries, some of those poles are now four storeys high. They tilt if you look at them from the top of our block. Im on a hill. One of them fell two years ago when a tree that was weakened by the drought and have not been trimmed back from the wires fell over in a wind storm, knocked down the pole which totalled two automobiles that were parked on the street and blocked the entire street. Luckily this happened in the middle of the night or someone might have been badly injured. I would like to say there are also poles behind my house. Now, as i said, i live in a very old building. These poles were probably put in 100 years ago. Theyre poorly maintained. If it rains, i have no telephone servi service. The wires until about a year ago were sheathed in paper, which is 1920s technology. I really think we have linemen that will not even climb those poles back there, theyre so dangerous. So i dont know whos inspecting them. I certainly havent seen anybody. Thank you. Supervisor fewer thank you very much. Next speaker, please. Good morning, commissioners. Thank you very much for this meeting. Ive learned a lot. My name is lucricia row. I live on russian hill and im on the board of russian hill neighbors. Ive lived in my building for over 30 years. Its on i dont mind saying its on the corner of chestnut and levenworth. There used to be four utility poles on that corner. Theres now seven. Thats why i was taken aback when the man from pg e said theyre trying to reduce the number of poles because we have three more. Plus, not only that, the new poles the old poles were replaced with much taller ones so they are almost 4 im on the fifth floor and theyre almost up to my windows. But the point i wanted to make is that from what ive heard is the tenant and owners of these poles, obviously these owners of poles are getting revenue from the tenants, tenants are leasing the space on the poles. So needless to say, they have little motivation to limit the number of tenants they have, unless there is some other Regulatory Agency that takes care of that, because its seemed like for a while every week another Cable Company or net company was coming by with big spools of cables and installing more and more and more. Needless to say i am for putting all these horrible wires and equipment underground. Thank you very much. Supervisor fewer thank you. Hello, im jill fox. Im here today as a Community Volunteer as a member of the San Francisco coalition for underground utilities. I live and vote in d 10. While i encourage you to fund a master plan, i would like you to consider the specific issue of large new developments. I live a half a mile from the shipyard. The shipyard is fully underground utilities, electric, fiberoptic cable, they advertise it. It looks beautiful. However, these utilities get to the shipyard through the established neighborhoods. All they did to power their fancy new hightech units was run wires on existing aboveground poles in the old neighborhood, poles that run on both sides of innis avenue and were installed in 1941. There have been fires, explosions, poles have collapsed. Its really not safe. So now there are hundreds of homes and eventually there will be thousands of homes basically running off an extension card past my home. So i have two suggestions have these larger Developers Pay for putting the utilities underground through the neighborhoods that feed to their projects, so that would be the shipyard and the candlestick side and several other large projects. Have the city establish a percentage per square foot fee on New Buildings that go into a citywide utility undergrounding fund. In our zeal to build, build, build, you need to consider the people who already live here, especially those of us near these big developments. With my suggestions, you will help assure while we add more homes and offices, we also make this city livable for all. Thank you supervisor fewer thank you very much. Next speaker, please. The cost of undergrounding has variously been estimated at 1. 3 million to upwards of 13 million, that shared funding through collaboration would increase project costs through decentralization and the subsequent increase in the number of stakeholders, as opposed to concentrating the present data. Is there a data reference with existing thumb notation of maximum Load Capacity on a pole stock basis with the present load volume expressed as a percentage as a laborsavings measure and in the interests of maximizing utility to suit potential requirement. So in between the poles do they keep a running number or tally of what the capacity is on the pole and between the poles . So we have also heard, if i recall, two or three speakers mention pole mapping and restrictions on information related to Homeland Security issues. So i imagine the same is true in terms of the operation of laying underground fiberoptic cable which we can all appreciate. Im wondering then if at t and pg e require that Field Operation employees verify their identities in the employment document and whether both agencies promptly comply with state and federal investigators on request, particularly given the laxity of rules regarding membership adopted by trade unions over the past decade. Supervisor fewer thank you very much. No other speakers. Public comment is now closed. Chair . Supervisor walton any more comments from colleagues . Supervisor fewer i think we learned a lot today. I want to thank colleagues for holding this hearing. I think public speakers bring up good points about the overhanging of wires and i look forward to calling for an additional hearing about the study, but actually i think there are still some open issues about what is on those poles. And now i am being alerted that the pole heights have been extended, which is something i didnt know about. So, chair, im respectfully asking to make a motion to continue this item to the call of the chair. The motion has been heard. Let me check in. I want to briefly say i appreciate all the folks that came out today. I know that theres a lot of people that have been pushing this conversation. Its interesting when you leave San Francisco and you look at other areas all around its not as i want to use the word polluted the wires everywhere in our city. The argument about not being able to do it, transmission lines, these are factual in some ways, but in other ways you can argue theyre not. If you go around the bay area you dont see the same level of congestion and wires and other localities. The other frustration i have for our part of town is we essentially have no undergrounding. So same in the richmond. So theres just not much as all or any in our part of town. Then when you do, people will get messages or get a letter from a utility saying if youd like to do this, you can pay 30,000 or 15,000 to have this done on your street. Each individual household our part of town are working families, they dont have that money. I know in the past 170 million was spent to do this. It was through a grant process. The communities organized were able to get it done, but it was not in the southern parts of the city or the southwestern part of the city. So we want to do this. I think its important. I think that scientific studies have shown that Energy Efficiency is increased when you put it underground. Safety is increased when you put it underground. Overall, quality of life is enjoyed when its put underground. So i think theres some good points made today. I think we should further in conversation and bring folks back, but i want to voice that today supervisor fewer i think its exploring our jurisdiction of the lines, not so much the poles, but the lines also. Supervisor walton i think its interesting that cpuc hasnt conducted a study of whether or not underground is safer. But yet we have new developments that are required to use underground utilities. Its interesting and we will have further conversations of course to understand how that could be the case in this point. To your point, supervisor, i want to thank you and supervisor stefani for calling this hearing today. This is happening in other cities. Its definitely happening on new developments right here in San Francisco. So were going to continue to work hard to make this a reality, and you have a commitment from us to do that, which is why were here having this hearing today. With that said, theres been a motion to continue this to the call of the chair. I dont think we have any objecti objection. Without seeing any objection, well move this item to continue to the call of the chair and we seal take this with no objection. With that said, clerk, is there anything else that we have . Clerk theres no further business. Supervisor walton seeing as theres no further business, this hearing and this meeting is adjourned. [adjournment] we are celebrating the glorious grand opening of the chinese rec center. 1951, 60 years ago, our first kids began to play in the chinese wrecks center rec center. I was 10 years old at the time. I spent just about my whole life here. I came here to learn dancing. By we came we had a good time. Made a lot of friends here. Crisises part of the 2008 clean Neighborhood Park fund, and this is so important to our families. For many people who live in chinatown, this is their backyard. This is where many people come to congregate, and we are so happy to be able to deliver this project on time and under budget. A reason we all agreed to name this memorex center is because it is part of the history of i hear to name this rec center, is because it is part of the history of San Francisco. They took off from logan airport, and the call of duty was to alert American Airlines that her plane was hijacked, and she stayed on the phone prior to the crash into the no. 9 world trade center. I would like to claim today the center and the naming of it. [applause] kmer i actually challenged me to a little bit of a ping pong the mayor actually challenge me to a little bit of a ping pong, so i accept your challenge. It is an amazing spot. It is a state of the art center. Is beautiful. Quarkrights i would like to come we have a quorum. Were going to go into closed session and regular business will mort start before 2 00. The start rules listed in the agenda are in effect and reminded that Public Comments may be limited to an individual for two minutes. Is there a notion didnt into closed session . So moved. Hearing no Public Comment, motion made and seconded. All those in favour say aye, and opposed no. Do we need to close the back door for closed session p . All those this favour say aye and opposed . That tables us to approval of the minutes of the june 12t june 12th meeting. General Public Comment. Any general Public Comment . My a 44 year member of our pension fund and tile you something today, that Asset Managers wont tell you, hedgefund managers wont tell you and Investment Consultants wont tell you. In the past ten years, public Pension Funds have paid out billions of dollars in management, performance and consultant fees and what do they have to show . Average retainers of 67 . In the past ten years, an investment in the s p 500 index is 6040 and the real estate index would have outperformed every Public Pension Fund in the world. One of the reasons that nearly all public Pension Funds are underfunded because they are overdiversified in investments such as hedgefunds. Over diversification reduces investments. Over diversification is for investors that dont know what theyre doing. Stocks, bonds and real estates, 33 in the s p 500, 33 in a 60 40 balance, 33 in the real estate index and one in cash. If you do this over the next ten years, you will outperform every pension fund in the country. Mr. Heb irkil. Thank you. Over the weekend i received an email from al telling me that youre up to 7. 81. How this fund earned about 2. 4 in a month is stunning and were happy. Were delighted. The retirees are grateful and i just want to acknowledge what a fantastic jump that was and all of you take credit for that. Also, the poa did note that the Institutional Investor has named the sf employees retirement system the public plan of the year and thats extraordinary and that deserves Public Notice to whatever extent we can do. Its such an extraordinary accomplishment and thank you to all of you and i will be for careful in my comments in the future. [ laughter ] i will call item number 25 which is retirement Board Members good of the order. The entire retirement system members, the employees of the retirement system starting with from j to our newest hire who have participated in getting us to where were at, doing all of the work we do, that each and every member receive adom case signed by the board and some time in august that it be entered, ac acknowledge and distributed to all of the unions, reminding everyone that these members that work here are part of the family. They are members of m etch a,ea1 and a variety of others. I think the accomplishments that these employees have performed over the years that have gotten us to the point where were at deserve to be acknowledged normally by the board, deserve to be in their personnel files so that this history becomes a part of their work history so wherever they go in the future, it will go with them. So i ask the board to support this by consensus. That sounded like a motion. Seconded. So i can ask by consensus. So i dont the calendar has a discussion item on it. Ok, a discussionitem only, i assume a draft would be available at that time. If so directed, for the record and you would accept mr. Casiatos assistance in writing such a letter . Certainly. I welcome anyones. So, then, this is not an action item and so ordered. Thank you. I would like a consensus from the rest of the Board Members at this time. Any Board Members object to what mr. Casiato suggesting . Ill second the item. Any addition or deletions. Public comment. I just noted that carmen shoe is listed as and sen absent andi expected should be listed as excused gimp t given to what i r to be circumstance and i think it makes a difference with regard to attendance on the board. I would like to suggest she be properly designated for or absence, thank you. Please make the correction. Via correction, shes absent and didnt ask to be excused, right. Right. Thanks for bringing that to our attention. However, no further Public Comment, those in favour say aye and opposed, passes. Item six is the consent calendar and any corrections or deletion or any items set aside for separate consideration . Motion to adopt the consent calendar in order. So moved. So second. Is there there a second andc comment . Motion made and seconded and all those in favour say aye and opposed . That takes us to item 7, the investment calendar. Item number 7, investment item, to hire jp morgan distribution management to manage and distribute security. Board members, when gps private Equity Managers have issued distributions, they may do so in cash or they may to soo in kind through delivering shares to us. For the past 1 15 years, we have been trading internally and we want to put these in the hands of professional management, professional traders and also to improve the efficiency of our own operations and the resources that we have available internally. Ill ask kirk to further introduce the item and work through the rationale for it. Thank you, bill. Ill expand on what distribution management is and talk a bit about the history. Ill describe a bit of our process and get into our recommendation. As bill described, private Equity Managers, via growth have a variety of ways to realize investments. Most commonly, they do the shares and initial public offering, a listing of those shares. The general partners have a choice. They can sell or distribute cash or as often as the case they will distribute those shares to the limited partners or the investor. Subsequently the, the investor is responsible for what we think of as the last mile of the private equity experience. When shares are distributed to the investors, their behaviour in the markets is often quite unpredictable. These are midcap stocks underresearched and evidence shows within the first couple of trading days, distribute stocks lose 8 to 10 and there is a risk for loss. If you lose capital or returns during the private equity experience, you diminish the return to the plan. Lps like us when we get stock have a challenge. We have a quandary and we want to maximize the price for the share. We also want to sell them relatively quickly to invest into other investments within the plan. Thats staff distribution generally. We, in past, have had a distribution manager. In 1996, the plan hired pinkus to distribute the investments and in 1999, credit fleece brought pinkus and in january of 2004, spurs terminated credit fleece for the credit mandate and managing distributed stocks. Since then, the handling of or the distribution of the stock has been the Public Markets team. I will say, though, in 2004 stap2004staff focus was differed 20 of the overall plan was managed and 15 if equity and 5 in fixed income. I would characterize our effort and our results in selling distributed stock as fine. Our data is somewhat limited but weve been able to ascertain we captured 97 of value and held the stock for 59 to 60 days on average. Today is different and ill talk about that. And i would say that the volume of distributions weve had over the last couple of years have been fairly muted. We received 150 million in distributions, stock distributions and 30 million or so in the past year but today, its noted that the private equity portfolio is over 5 billion in value and 10 of that, 500 million is sitting in post ipo stock. Theres a potential pipeline here for distributing stocks. Intelligenteryconsently, its te these stocks. There is no best practices, so to speak. In my view, best practices are what is commensurate with stats capabilities and focus. As you know, staff focus, 100 of focus is on researching, monitoring, external managers and that is where our expertise and skills lies and thats where our focus is, not in single stock trading. To this end, i reached out to our consultants. I reached out to our prayer institutions to determine which firms do this type of work and what im talking about is taking distributers stock on a discretionary basis and managing them. It turns out there are very, very few firms that do this work. In january 209, staff send out and rfi to five firms on a discretionary basis and two which were brokerage firms. Given our focus on extendal managers, however, we eliminated two firms for consideration. Staff, and this was a joint effort by the Public Market and private markets team conducting onsite visits and we spoke to dozens of reference. A comparison is oblique and the reason is, if you think about it distribution managers dont require stock and they have to influence or control over the quality of the stock that they receive, the timing of the stock they receive. They represent a variety of clients, some which have very, very good high venture programmes and others dont. So co theres no benchmarks to compare the track records of distribution managers. However, we were able to conclude that over average of the four firms we di dissected y were able to value 101 and 103 of distribution value and that is ultimately our goal with the distributioning manager, to get close to or above our distribution priceses because if you recall, the general partners will mark their portfolios based on the value of distribution date and earn their Incentive Fee on that price. So we have, as close as we can get, the economic experience will be maintained. Put given the track records offered little in terms of differentiation, we focus on equal dayitqualitative factors,y focusing on the global or Resources Trading capabilities of the firms. Given that the nonu. S. Focus of our venture and private equity portfolio, we favorited firms with global resource. We focused on the firms that had a certain element of alignment, meaning the distribution businesses were important to the overall success of the firm. The link to consider fee structures that provided some incentive, a fee incentive for sales beyond distribution values and finally, we considered the tenure, the relative tenure of the team. With this as a backdrop, staff is recommending jp morgan asset managements, private Equity Distribution group. This group is the sole manager for jp morgans private equity business. In addition, they manage distribution mandates for 40 external clients. The group is lead by a gentleman of ed phrase over 12 years. The firm and leadership of the distribution management has been together for 12 years. They apply a largely quantitative process on 30 years of data that recognises the technical patterns of distributed stock after distributions based on their industries. They combine momentum and volatility measures into their distribution decision. 95 of the distributions that they get, they end up selling them, but they have the latitude to hold on to distributions should they believe that these distributed stock have value over the longterm. We benefit here for us with jp morgan as they have the benefits of trading through jp morgan asset managements Global Trading platform trading 20 to 30 million shares a day and has local trading centres in all major markets. To summarize, we talked about distribution management, what it is and talked about why spurs needs it. Spurs and staffs focus is on managing and reviewing, monitoring external managers, not trading stocks. Jp morgans virtues is that they have a tenured team and its a Critical Service for their private equity business. If i can add a couple of brief points. Kurt touched upon theres 500 million of any of the publically traded stock in the private equity portfolio and this is about to become more important than its ever been. Put six years ago, our private Equity Programme was about 2. 3 billion and 2. 2 and now its almost 5. 5 billion. So again, this is to give a scale of how important this will become and then lastly is that six years ago we had 1. 2 billion or so in unfunded exitments and now we have 3. 2 billion. So this is going to sustain itself in terms of importance now for quite some time. Well turn it over to the board for questions. Board questions, ill start with casiatos. On the fee auctions, walk us through a b and just how theyre incentivized and what the difference is. One thing ill acknowledge on fee, this is the standard process and were in negotiation of whats dated here. We wanted to be careful about saying anything before we concluded. All of the firms had similar options. A flat basis points which was proposed of 60 basis points. Its 60 basis points annually but if you think the average Holding Period is 59 days or so, you would say 60 basis points on whats hell for 59 days. So a base fee. Alternatively, we could pay them less on acidbase fee, in this case 25 basis points but 25 of the profits above the distribution price. So if they were to sell a stock at a value that exceeds what the g ps distribute it at, they would get 25 . Again, were negotiating something thats favorable relative to both. Thats all i have. Same question. If theres no further questions, ill make a comment. Is there a motion . Ill move to approve. Is there a second . Ill second. Ok, Public Comment . I would just like to say, like hedgefunds, private equity is High Risk Investment, very high cost investment, ver very. Let me give you the passive investments in stock funds and real estate. Vanguard with passive investment, 15. 4 . Vanguard, 60 40 balance index, tenyear returns, 20 . Vanguard s p 500 index, tenyear returns, 14. 23 . These are passive investments. You dont need any highrisk investments like hedgefunds, private equity and before you invest, read what they have to say. Its a High Risk Investment just like hedgefunds and you find out over the longterm, passive investment will outperform management investment. You can go back 100 years to identify that. In the last 30 years let me give you an example. The s p 500 consists of 500 large corporations. In the past 50 years, less than 1 of the Money Managers have outperformed the s p 500. And in the last 15 years, less than 8 have outperformed it. So passive investments, you can go back and backcheck and youll find out passive investments and were supposed to be longterm investments youll find passive investments will outperform management investments. Very low risk and very low cost. This is an example of something well tie to the strategic plan. Trading activity always is an issue expecting best execution. With Public Security managers, its rolled into the rate of return we see and this area is different. However, if staff i think mark was the one handling these trades, hit 97 , thats an a performance so how material is it to get 101, an a plus . This is to issue materialality, less than a Million Dollars. It would be great to have a Million Dollars and thats more than 20 times what some of the members annual salary is. However, our goal this year and basically end of year is to earn 1. 8 billion. So when you put that 1 billion over 1. 8, not that its not important but how significant is it for the things we should focus on trying to do better . The incremental money we might achieve by putting in an external and i appreciate staff telling us they did consider many alternatives, perhaps we will be able to justify that the money were saving by doing this, if you allow us to reinvest by hiring more personnel to do better investing, it will more than pay for itself. Thats a comment and thank you for finding this way to improve another project to increase value of the system. Public comments concluded and no further comments, those in favour say aye and opposed. That was a motion by helfon and seconded. That takes us to eight 8, private equity portfolio update. Board members, this is an update on the private Equity Programme in 2018, when it seems like a distant memory but the Public Markets struggled and were negative and our private Equity Programme was up 17. 6 . The tenyear return of 14 and inception to date return of 15. 9. Tonya and cambridge are here, as well as tory cove, are here to provide an update on our programme. Tanya . How do we get the presentation going . Thank you, bill and good afternoon, commissioners. Well try a slightly different setup for our performance to tate. This time were combining our strategy and performance overviews for each. To my left i have those with cambridge associates. They advice on portfolio strategy, portfolio construction and they support staff on new investment opportunities. I also have here representatives from tory cove. Tory performs different but very important function within our private quebe equity portfolio d collect data and validate that data and the data feeds into our all of our reporting and Risk Management positions across the whole portfolio. So with that set up, im going to opportunity back to private equity. 2018 was a good year for our private equity portfolio. The portfolio was up 17 , 700 million in gain for the portfolio. Deployed over 1. 3 billion across the various private Equity Strategies and we receive 800 million in distribution. A historical record for our portfolio. Since inception, our private Equity Programme has been a fantastic contributor to the overall planned returns. Our net return, net of all fees and expenses is 16 which is double the required rate of return for the plan. While its going to be challenging to heed this historical performance, we believe that our strategic changes to the portfolio, strategic shifts in the portfolio over the last couple of years position us well while going forward. In 2018, we finally reached our target allocation to private equity, 18 , and were above right now but the range is outlined by the board. We have been deploying roughly billions over the last five years and now, we are reaching the figur five, six year mark ae expect probably in the next year or two, our private Equity Programme will become selfsustaining and in addition to simply deploying capital over the last five years, there are several other things about our portfolio that differentiated from other private Equity Portfolios of other types of public pension plans. First of all, i would like to highlight our exposure to Venture Capital and growth, which translates into exposure into the technology sector. We also have quite Global Portfolio compared to other pension plans. It was a large exposure to asia and while the recent volatility in the market, longterm views to asia remain in tact and we believe going forward, our portfolio is positioned well. With that, ill turn it over to cambridge for comments about 2018 and the markets. Good afternoon, commissioners. Its great to be here. This is our fifth year now presenting to you the private equity annual review and were delighted and thrilled with the long relationship weve had with you and your investment staff. Kelly jen isn jensen is on youn and our San Francisco firm, as well as i am. We have a Team Dedicated of about 25 strong within