For example, healthcare, medical access and Senior Housing and similar to what tonya was discussing on the private equity side, those sectorfocused funds, we think, you know, our data has shown that those sectorfocused funds have generated more than the diversified funds and also gives us and staff the ability to tail tailor the portfolio more than we could if we were looking at diversified funds. Thats an interesting tabernacledynamic,maybe a benefe market. That isnt to say moving away from the funds and theres approaches to having both on the portfolio works pretty well and some of those diversified managers have proven to be good at pivoting from one sector to another and much more nimble than we could in terms of allocating a specialfocused fund. So i think the combination is attractive. Just touching on the market environment, i dont want to spend too much time but similar to private equity and most asset classes, real estate is fully value and real estates across markets and property types, for the most part at their historic lows. Again, unlike 2006 and 2007, leverage is not as excessive as it was back then but granted, thats low compared to the gse. But lenders have been more and you dont see the ri runup in l estate like ten or 12 years ag. The nonbank lenders, funds that have been raised to fill the void by those traditional lenders, that sector has had a lot of increase in capital and you are seeing some pressure there, some deterioration if credit quality. So it bears monitoring but leverage is more benign than in the past cycles. You know, supply and oversupply is typically the dynamic that ends real estate cycles. You know, here were in a reasonably good spot where supply in general is pretty balanced, relative to demand. Youre seeing pockets of oversupply and sectors in markets. But overall, that is reasonable. Luxury apartments in certain markets, youre seeing oversupply, sectors like Senior Housing seem to be oversupplied. So its something that everybody watches closely, but relative to past cycles, that is in good shape. You know, one thing that i would note that maybe a point of caution, when you do see healthy tedemand for real estate, a lots in the big technologyoriented Companies Taking a lot of industrial space, office space and so i think there may be more correlation that theres a hiccup. Real estate may be more impacted than people think because so much of the demand is driven by Technology Companies but real estate has benefited from those companies. Just moving quickly to energy, energy is interesting. Well get to it but certainly its not frothy in the number of funds out there, but you know, a lot of people have commented the private Equity Energy model is broken and i think what they mean by that is that historically, Public Energy companies have been very eager and aggressive buyers of privatebacked companies, these private equity funds have done a great job historically of buying a small pool of assets with not a lot of production through a Business Plan that involves Newer Technology has been able to greatly enhance production and sell that asset to a public buyer thats eager to take it to the next level. Public Market Investors have pushed back on the pub Energy Companies to be more disciplined and not grow at all costs. They want higher dividends and stock buyboxes. Buybacks and r and thats a dynamic as i mentioned earlier, regarding distributions, most equity funds are sitting on more portfolio funds they would have sold but theres not an ipo market for them. The normal strategic buyers are not there. So that will evolve over time, but thats a particular dynamic now that is unique to the energy world. And again, while we talk about being dry powder in energy space, i expect a lot of funds, not that they wont get raised but they wont achieve targets theyre looking for. I dont think theres much to add on slide five. In terms of the Growth Portfolio over time and slide six shows the assets return over a period of time relative to public benchmarks. Slide seven shows the participants operformance of tho compared to the private benchmark which is a mixful real estate and Natural Resources. And then in slide eight simply shows the real assets portfolio is added relative to the total plan. Delving into real estate, we show performance of real estate across time periods relative to both the public index, which is that index in the light blue and private index, which is the odce, which is the darker blue to the right. And those indexes should the underlying real estate is similar, leverage is similar and over long periods of time, they should perform similarly and you do see that on the longerterm charts on the right, but over shorter periods of time, as you would expect, particularly the Fourth Quarter of last year, the Public Sector underperformed and you saw a exhibit diversion sign there. On the Natural Resources substrategy performance on slide 10, we have relative performances and then strong across all periods, absolute performance has been, professionalfranklydisappointinn strong over a period of time and think theres upward biased if you look at oil prices, theyre up about 30 thus far in 2019 relatively to the end of 201. 2018. So those numbers should move higher and interesting to see as i mentioned before, just given Public Energy investors and their frustration with those companies and management teams, i mean to see a negative tenyear and 20year return for the public Natural Resources indexes is amazing. But so again, good relative performance and hopefully absolute returns will steadily improve. In terms of portfolio construction, we show a mix between real assets and natural assets. Four or five years ago, the Natural Resources were there. There wa suspect suspec isnt ao achieve joachieve, just a bottop approach and understanding that will get a good blend. So i dont think we or staff feel pressured from a topdown perspective to move one of these allocations in either direction and i think the carnal allocation feels right when you look at the relative size of these sectors in the market. Delving deeply into real estate, you see a mix between the Core Portfolio and value to add a portfolio and will that core allocation will decline overtime and we will decrease. As i mentioned earlier, the u. S. Component decreases, will decrease and has decreased and will continue to decrease slightly as we add to europe and i think, asia, in particular. Propertytype diversification is attractive. I suspect some of the there will be more exposure to some of the more nichey real estate is an error that well talk about more, some of the more Technology Real estate and cell towers, not a lot of options on the Technology Side but there are some that we have considered and will continue to consider. So maybe just staying with real estate and going to slide 14, in terms of what are the themes . Where have the commitments been . Looking back in 2018 in the last couple of years, weve done a nice job of increasing exposure to asia and we have exposure to six different managers in asia and its a nice mix across developed markets, as well as emerging markets. Within that subportfolio, theres good diversification where weve got the drivers and the risks of japan compared to, say, china or other emerging markets are different. So those managers complement each other well. In 2018, we were less active in the u. S. And that wasnt so much a conscious decision but the environmental does play a role but probably more driven by the bottomup approach and the managers that were in the market last year. You know, to the extent that we have been active in the u. S. As we mentioned earlier, with the advent of more focused strategies, we have taken advantage. You may recall, we add aded a fd focused on sell storage and industrial appropriate propertie u. K. And northern europe. I suspect well be doing more of that and those strategies, i think, benefit from some the aggressive capital lows, a lot of the dry powder. Those are smaller property types for a lot of managers and sovereign wealth funds are hard to get exposure to. To the extent we buy smaller assets individually, historically theyve been able to sell those properties as a larger portfolio at a premium relative to what you would be able to sell them for on an individual basis. So not something that is priced into any basedcased model but something that should continue to be there given the dry powder on the market. In europe, i would say, not s me bottom up. If theres one theme, it may be notwithstanding what we discussed earlier. But there have been managers that weve added that have a smaller cap orientation focusing on smaller transaction sizes. I think the attractiveness there is that theres a much wider an versuniverse. A lot of times sellers are smaller and theres dynamics there, i think, that should help slightly get better entry valuations. When the market corrects, thats not going to be not to protect those managers, but they are probably buying at slightly better yields and just benefiting from greater inefficiencies. One thing weve heard from Real Estate Managers is that funds deals over a hundred Million Dollars see pretty aggressive pricing, so to the extent managers can stay under the size range, theres a little less competition there. Going forward, again, i think some of the more focused strategies well look at to continue to look for opportunities on the industrial side. Ecommerce trends are pretty well known in the market and not contrary in play but a whove he demand and theres a couple of managers that have had a long history in the space and each have a different kind of competitive angle to allow them to do well in the competition. Competition. This touches on healthcare, but theres a sector through diversified managers and think about Senior Housing and its just a much more complicated sector with a big operating component. So identify managers that are more focused, we think thats a better approach for the property type relative to a broader diversified strategy. Just moving on quickly on the Natural Resources side, we arent as you look at the pie charts, theres a good mix across the different sectors with energy, upstream, midstream services. Weve got mining exposure which diversifies the energy exposure. Its always going to be a largely north american portfolio, i think, given thats where the bulk of the opportunities are and we specifically, you know, shied away from a couple of nonu. S. Opportunities where, i think, initially we were attracted to the diversit diversification std its not commensurate with the elements in some of those strategies. So when we look at the Natural Resources portfolio, again, there isnt necessarily a logical place were moving in terms of gaining exposure with certain sector subsector. The portfolio is in good shape and rarely about, to the extend we seextentwe see a manager, itg an existing manager so high grading the managering in the resources portfolio. One thing that stands out with the resources portfolio, staff has done a great job of underwriting, identifying and youve approved these recommendations to a handful of emerging managers raising funds ones, and twos, which can be harder to get comfortable with, but i think those strategies, theyve done well so far. Like i was saying earlier, those funds are smaller and the alignment is better where these managers are not getting wealthy off of fees. And now, you know, you fastforward to the environment where managers are raising slightly larger funds and maintaining discipline and theyre largely asset constrained. The asset portfolio is not something to be replicated today, given the exposure that weve built and again highlights the importance o of taking on risk. Earlieearlier this year, theres increased exposure to the Mining Sector and got basemetal exposure and that should be added to the portfolio. If you look at energy, that industry is arguably been a victim of its own success where theyve gotten so good at leveraging technology to grow protection that any time the oil and gas prices rise, you see that immediate supply response you dont see that in the Mining Sector. Its extremely hard to get mines online. You know, if anything, it takes longer than 10 or 20 years ago to go from entitling a mine to get it to producing status. So as a result, when pricing perk up, they will tend to stay higher for longer and so i think adding some exposure there, you know, theres probably greater risks because there are these assets are typically an emerging markets. But i think at the size were doing and i think it should be additive. One thing i think we should point out, we continue to look at Renewable Energy managers. We did make a commitment to a Renewable Energy manager last year that were excited about that is looking at a different variety of certificators there. Thisectors there. The returns hat great and so, i dont think the portfolio has benefited from being underweight but thats changing. As that sector matures, were seeing managers that meet the standards of other asset classes. Theres more track records. So i would expect that would increase over time. And just quickly on coinvestments, similar to private equity, early days, the early results are promising and weve made ten coinvestments since 2016, totaling 120 million and largely on the resources side and les i thinks donald trumdreichdriven by the. I think theyre getting a word out theyre open to do investments and open to deal flow and on the coinvestment that flows, demonstrators can do it in a timely matter. So deal flow is important. Were seeing a great amount of deal flow and disciplined. Again, weve looked at a number of real estate deals recently where the base Case Assumptions require rental rates that have not been achieved in that market or a price per square foot that maybe has not been achieved before. So its just a little bit, you know, evident of it being later in the cycle. We just need to be careful and pick our spots. So i just wanted to make sure that we made that point. Maybe just moving on to the pacing model. This will look similar to what weve covered on the private equity side. As weve moved close to the 17 target, you will see the annual commitment pace is expected to be 800 million for the next few years. Apologizes, we lost the green bar somewhere between 2022 and 2025. So were not suggesting no commitment in those years but ramps up to a billion dollars a year during that time period. please stand by . Point on this slide. 3. 5 billion in totally gains from 139 funds. If you take the tom 20 that is 28 funds. They generated 78 of net gains. Again, a very concentrated theme. The top 10 is 14 funds with 66 of the net gains to date. The bottom 20 funds, bottom 28 lost 123. 8 million which represents 100 of logs losses of most of those are young. Only 8 are older past the j curve. Pretty good performance. We are going to jump to slide 6 now. Looking here at the performance real estate portfolio has driven the performance of the real estate portfolio. It has out performed in all except for the five years where the core was the driver of the performance. It is expected that since opportunity portfolio has higher risk. These are the metrics. Look at 21 of the exited core real estate portfolios only one of those was below onetime. You have had nine funds exited, three were below 1. 0 times. An example of the risk. Jumping to slide 8, annual appreciation of 314 million, 80 from the real estate portfolio. It made up 71 of the fair market value. There has been another shift at the beginning of the year core represented 55 of the real estate portfolio excuse me 52 and opportunity is 55 . You are shifting from the core to the opportunity strategy. Contributions for the year. 51 were to opportunity and 49 to Natural Resources. No core contributions. All on opportunity real estate. I think that is everything i was going to hit on. David anything . I have nothing. Board members. One last comment. The reason for the change in strategy from core to opportunity is to enhance returns. We dont need the yield from core because only 2. 0 of net assets annually are going to pay for plan benefits. We are not in a position where some public Pension Plans are paying out 5 . We have a better illiquidity for that. The payoff for that return is on page 19 of the cambridge report. There is a powerful positive cash flow driver when you start in year 2 2022. I wanted to explain the rationale for the strategy. I will turn it over to the board for questions. This is not an action item. Is there Public Comment . I have been coming to meetings over two years and listened to the mum bow jumbo. All of the people are all active money managers. How communevehowhow come there e from vanguards, price. You get more information over the long. I just told you that vanguard, s p 500 in the last 30 years, less than 1 of the s p 500. My recommendation is start inviting passive money managers, and i think your outlook on investing will change. That concludes item nine. Item 10. We are probably going to lose a quorum in 55 minute, we have nine action items pending and five nonaction items pending. I would recommend starting with items 16 and 18. Okay. Is that okay to standby for several minutes . Thank you. There are several action items with deferred comp. We will do that Committee Report subsequently. Lets go to item 13. Action item. Approval of proposed revisions to the sfdcp loan policy. May i ask a question please . Go ahead. These items are all presented to us are living documents, correct . Yes. Okay. The existing policy we from time to time can. It is a living document, as living documents they can be amended at any meeting . Correct. Therefore, what i want to do is in the interest of time which is going any of the living documents i move