The interest coverage ratio. It is down around 2 versus what it was years before. Meanwhile what we saw the private markets presentation on private equity, we looked at the volt u volume of buyouts. Is that driven by the fact people making loans has changed and is no longer banks with fidc regulations with those that had no regulations is that driving all of this covenant lack of restrictions . So the direct helping space is a comment product. I am going to switch. Direct lending is a comment product. Jelly to the private equity peanut butter. The more dry powder you have. It is the dry powder on the side line. Direct lending caters to that. With the rise in i think the third slide, slide four of the deck, shows the competition for those lending opportunities. In all of these entities making these loans previously for the big banks that had regulations. Thank you. Skipping because there is a Silver Lining in all of this. We are over to the opportunities presented or will be presenting themselves as a result of these excesses. We will transition from excess side to the opportunity side. Look at slide 8. This is buyout multiples. I believe our colleagues noted they have been at 10 times for a long period of time. As you can see leverage is a key component there. If it ever rises and if the ebidta adjustments come home, there will be opportunities for the credit funds to play an Important Role in the portfolio. Slide 9. We look at liquidity. Opportunity and distressed funds make money when they provide liquidity when there isnt any. Currently we see very little evidence of price support in the markets. Upper left hand dealer inventories. It shows that dealers are less able to make markets to provide liquidity to asset owners and that provides opportunities. Top right. You see the growth inflows of mutule funds. They are ever increasing. We anticipate there to be in shakeout as well. Lower lefthand corner is a widely used indicator of liquidity in the markets, that is probing a new bottom for the past year or so. Low right hand column shows our distressed benchmark and our Credit Opportunities benchmarks and how they performed relative to periods of high lick identity. That is where liquidity where the orange be line spikes. On on page 10. Talk about fundamental weakness and opportunity. Upper left handgraph is from the bureau of economic affairs. The orange line is nonresidential fixed investment. Nonreal estate. As you can see, profitability is flat lining, and yet investment continues. This suggests that the corporate sector is investing in negative projects and the green line shows burning of the cash. That is the different between profit annette fixed investment. That is financed by lentors. Le lenders. When the line kicks below the zero, it means lenders are increasing lending and loosening standards. It takes above zero to tighten the standards. There appears to be a trend of banks tightening credit standards making liquidity less availability. On the righthand side you can see it is to be rising. We will see what happens. If it does rise that will create more stress. Right now the stress is yet to really manifest itself. That is the right handgraph. We expect to see more investing. To slide 11 which really addresses the Specialty Finance market, and this is the hardest to present because the managers frequently target areas of the market that we would normally never think to target. I dont know if anybody here owns a recreational vehicle, but in the top do you . I wanted everyone to laugh. I appreciate the humor. Upper left handgraph shows rise in rv shipment. Look at unemployment in elkhart indiana it is a leading indicator for recession. Historical rv shipments. Do we need this many . You are going to say the baby boomers are moving. Think about it if you have parents who are baby boomers. They probably havent purchased an rv. Have you your parents purchasedn rv . We see managers attacking this that arent normally visible to the naked eye. Upper right hand we see the speaking of auto production, layoffs are starting and in germany as well. They are picking up there and starting here. Lower left hand column. Auto loan delinquencies are rising. We look at managers focusing on auto and consumer loans in the u. S. And europe. We see consumer weakness and canvassing the world to find gps to take advantage in the down market. With that i will turn it back to anita. Just really quickly. On page 13, recap, this is our plan in terms of program construction, a balance of capitalization strategy in terms of risk return as we go down the line from capital preservation to return maximization it is higher return and higher risk as well. We are looking for that balance in order to reach our return target of 8 to 10 for this private credit allocation. We talked about establishing two to three or three approximately separate account managers. These would be larger corpsman gerrylatiocoreylation ships. That was a good 12 month process to evaluate, structure and negotiate and close that commitment. On top of that from beginning of 2018 to the yeartodate, we have committed to 14 different managers and many of those are in the opportunity and return maximization bucket which required a lot more in terms of labor intensity. Pay separate account that is likely to be focused on capital preservation. Those are larger fund recommendations. Coming forward with the actual funds is a opportunity return strategy. Quickly on page 15 how the program is doing. I know we will hit on more detail. As far as focusing on the opportunity and return maximization categories and managers for the program, it has paid off in the shorter term period. The one and three year numbers have really been the outperformers for the private credit outpatient. Overall the highlighted row there is the private credit Portfolio Performance and that beats your benchmark of 50 50 blend plus 150 basis points premium as well as our private credit benchmarks. Lastly to reiterate we ran the models. You saw that in march. We dont have anything to really report back in terms of changes. We continue to remember 750 million annual target commitment pace. I was going to make a couple general comments. If you watched any of the testimony in front of Congress Last week. They did comment lending was a risk concern of theirs in the marketplace. I think echoing some of the cambridge thoughts. The chairman talked about this morning how the leveraged market shifts the risks away from the banks to the private markets. We hear a lot of Interesting Data about what is happening from the private equity managers, and part of it is that ebidta is now a funky number with a lot of adjustments. It sounds like based on between the lines of discussion of cambridge you you guys are trying to establish more disciplined money parameters with the separate accounts you have, which is a critical element of the under writing today. The Competitive Pressures coupled with the number of lenders out there has caused a buyer market in the sense that the private equity sponsors are now when they are approaching financing asking multiple parties to provide the best term shields. It is not just pricing and execution but the lack of covenants. Private equity sponsors are exerting muscle in this current environment. With that said, in a 2 treasury environment everybody is chasing after yield with the idea of rising Interest Rate in this scenario plausible having a floating rate instrument moving up as the yield curve shifts is a critical component of the private credit. I think the approaches is sensible. We will talk about performance. The bottom line is performance in this sector outperforming. I dont want to steal your thunder. I will be very brief and fly through this. Exceptional performance the benchmark over every period in the one year focused on right now 55 of appreciation came from five funds. One of those represented 21 of the appreciation, which was focusing on airline leasing. Also, on this page i want to note the bottom bullet. You may have an older version. It is to say of 22 investments of vintage years 2016 or older, all are valued at costs or above. On slide five the picture we like to show again the value created because money was invested in this sector rather than the benchmarks with the same amount is 104 million. We are jumping all the way over to slide 12. We talked about moving some assets, 17 from the private equity portfolio to private credit. I want to draw your attention to this page that gives metrics on what a hypothetical would look at. The multiple would have increased slightly. I rr decreased slightly. It would have made the portfolio older from 3. 9 years to 5. 3 years. There would be changes in industry diversification also. That is all i have. Two comments. Page nine outperform answer of 9 over one year and 5 over five years. These are extraordinary outperform answer. The second comment i was going to make is really due to strategy tilt away from direct lending and more towards Specialty Finance in other areas. We are also further along in the development of this program than just the 3. 4 allocation of nav would indicate. We have 920 million of unfunded commitments. Between those that is 7 . We are probably a little farther along in underwriting because capital is slow to call. Now we will turn it over to the board. Board questions . I have a couple questions. In the sense this is still kind of new. Did every fund manager report to you when there is a default on any of their securities . If they do it is the quarterly report. Not that day. Right. The issue in this new category, i think we should get ready to report that because it goes to the issue of under writing the under writer. I have asked you that several times. You dont like them you dont reup with them. We expect a certain loss ratio. When it is above 2 . I think what is more important than the loss ratio is the recovery. Both to see and david touched on how we include the guidelines with our separate accounts. That is the portfolio from the increasing losses and resulting in the recovery. Add to that. It is something we published today. Precisely on how to look at defaults and i am happy to share that with the commissioners. Defaults can easily be hidden by these managers, not hidden but renegotiated and changed in the Public Markets default are not considered default in the private market. I have a white paper that talks about what to expect from direct lenders when the cycle turns and key identifiers of what behaviors you expect to see. How to track the Portfolio Performance because the faults are harder to find. That is sharing with the world how we track these portfolios. When we are with the opportunity people focus on the distressed debt. Secondly in terms of the benchmark, our risk compared to the benchmark risk, we get a sharp number later. The comparison is great excess return. I am trying to understand risk versus the benchmark. Our portfolio includes distress and the benchmark did not. We would be outperforming. That is something as the program evolved we have to include on the line is this direct component. I think the riskiest pav part we doing quite well. To measure how we are doing. I would expect to see us change the benchmark to include distress in this program. No action item. Public comment. Next year there is a good possibility there will be a world wide recession brought on by a worldwide credit crisis. Therefore if that happens you shouldnt be involved with any High Risk Investments like private credit, private equity, hedge funds. Investment capital in every single recession gravitates towards safety. My recommendation is divest of every High Risk Investment and go towards low risk or moderate risk investments. Okay. I am going to make a general comment about the three presentations. It is a time management issue. Please assume that the board has read what you have submitted. It is great you are doing this anen on the video so members of the plan and stakeholders can see what and how we are doing. Focusing your presentation on what you want us to look at in three reports in over two hours. If we can concentrate that to a more effective approach. That is my request. That concludes this item. I lost track which item we go to next. Committee report. Governance Committee Report to commissioner stansberry. Going back a couple years ago we brought in an outside consultant and had an off site. The board talked about changes. Over the last couple years the committee is working to implement the changes. Unless anybody has any additional questions that is it. No. Some of these things will come up again in the next couple minutes. That concludes item 17. We are on 18 Strategic Plan. Public comment on 17 . No comment. Item 18. Item 18 action item. Presentation and approval of the 20192024 Strategic Plan. We presented to the board the senior staff proposal for a Strategic Plan looking forward for the next five years. We focused on three main goals. Retirement readiness and have enhancing member experiences and Leadership Development and stakeholder engagement. In respect for the boards time i would certainly just ask if there are any questions on any specific sections or if you would prefer i could walk you through. As long as this is a living document, i would move to adopt it. I would ask what periods of time would those be reported on . Quarterly, semiannually or annually . It would be reported on, i think the board policy says at least annually. I would like to see it reported every six months would be good. I would make a motion to adopt this with the six month review. Okay. I have one major question. It is not under finding another minding under mining this. The first part may seem like unnecessary tweaking. For goal five b strategic initiative. To include retirement Boards Development that bullet should be under item four. Those are issues the board needs to develop. I bring it up because when we get to the next item about the governance, the things we adopted at the last retreat and things they lined up for us to do, they go together. Maybe that that was an oversight it was not there. Development is more than just communications. Government and Decision Making go together. If we can amend that i will support the motion. I make that amendment. That is a friendly amendment. Between this and the next item is a lot to be discussed. This is a living document. The buzzword missing from this the word leadership is there, much like the motion about recognizing how well staff has done working for the system for the benefit of the beneficiaries and the city, it is extraordinary. We are not simply dependent on the staff that work here, they are the engine that get it done. Why . It is more than the fact they get paid and get a pension. The culture they want be to work here, this is a productive and nice play to work. That is an environmental issue we hold the director responsible for. That is one of the objectives. It is more than just developing people. It is developing people in order to do what . It is beyond the issue of the mission statement. I am sorry i dont have words for it. This is a living document maybe in the next couple months we will come back and capture that. That would be the context to understand the different recommendations about who we hireds, plans, restructuring, provide Better Services to the members. Good okay. Motion made and seconded. I will call for public comment. I agree with you. The culture is very, very good. It would be better if our Pension Funds bought a San FranciscoOffice Building for them to work in. Not only would the culture improve, it would be a great investment. If you would have bought one 10 years ago it would have been valued in value and you would have been collecting rent. You should give that a lot of consideration. Spend 500 million on a San FranciscoOffice Building and find out that is a much better investment than a hedge fund. All of your work in the Office Building if you cant work in an edge fund. Thank you. With that i call the question. Those in favor of the motion made and seconded say aye. Opposed. Okay we are on item 19. This is discussion only with several action items behind it. I am trying to figure out how to manage time. This is a day andahalf retreat boiled down in this document. I think we should spend another day and a half talking about this. This was a document that myself and staff and our consultant put together to try all of the recommended changes that came out of the group. Just being presented to the board so the board can see what they voted on and what has been done. It is intended to be as submitted for your information only. I would say as submitted there is also the recommendations for all of the changes, some of them are just name changes, all of the documents in terms of reference. Others are date changes bringing it uptodate. Again, since we are reviewing these every six months, we can call them to review them. We will review them in committee, i would say we could take them all at one time now and accept them as submitted. The policies and terms of references are being reviewed on five year cycle unless something comes up. The Strategic Plan report would be every six months. Some of them are very technical. The service cord natetor. We havent reviewed it. It is very technical. They go as a packet. Certainly, i am assuming we could consider them altogether. The terms of reference, board communication policy, finance committee are certainly things that as president driscoll indicated were talked about plunge the Board Members for more than one and a half days retreat but have been talked about since. This is 14 pages o of matrix. I am letting the Board Members know. Be prepared to figure out how we are going to do things going forward. There are things i have to do. Educational development issues. I will be bothering you with 800474676 with the phone ca. Thanks for doing this. With that we can continue on with the terms of reference changes. Public comment. I ha