They are blocked from buying the securities. I just wanted to highlight that there are already decisions made so that you can implement this in a very efficient manner. Finally, if you will turn to the last slide, we will just summarize the next steps in terms of confirming that it works with the planning document and we have confirmed that we have already worked with t. D. Ameritrade on setting up a process for ongoing, and it is just a look to see if participants start using it, we are at 195, currently. We will continue to monitor the fees that are charged, and we have looked at that. Again, it is very competitive and favourable. And then we will run those quarterly screens just to make sure theres nothing that pops up on that restricted list that i already outlined. That is the ongoing process. And they have set up a system that will identify any security that might go to a pink sheet or have some sort of reregistration security, which can happen in various situations. And we will receive a copy of those . Yes. From that, we will update the ips and certainly as we are going through the transition, having steady calls with both t. D. Ameritrade with credential, just to make sure everything is going to transfer in kind, and those that wont, making sure we have made arrangements properlys participants as needed. I will stop there and pause for any questions. Is there a motion on the recommendation from the committee . The committee did follow up on this. The committee is recommending it. Based on the research in the Background Information and our staff. We have a strong recommendation to adopt this. When we are considering a motion, to be addressed in the motion slide four, offering e. T. F. In the existing stock and bond . Im sorry . I think that was a decision that we had. Actually, opening it up beyond mutual funds, so the recommendation would be to approve opening this up to include mutual funds, e. T. F. , and u. S. Exchange. All of the above. That is a full recommendation. And to commissioner driscoll s point, city would also be included. Commissioners, do you have a question . No, you just answered it. Does that cause a recommendation to make a motion . I will motion it. Second. I think it should be explicit about we shall include the list of restrictions, meaning so people cannot buy it. The way it is written it is a little vague to me. Okay. Redo the motion to include that. How do we include the word exclude . By going with t. D. Ameritrade , you have no option to include the restrictions, so it is inherent. We can certainly clarify it and just say we would open it up to include the restrictions and the Restricted Securities as listed in the presentation, but that is not an option. T. D. Ameritrade does not allow you to cherry pick and say, i want to allow, you know. The platform is already restricted. But we can clarify the motion i want it spelled out here. Sure. I will spell it out in my motion. [laughter] i will move to approve this with the restrictions as stated by t. D. Ameritrade on the subject matter. Thank you. Great. Will the board be voting on the amended policy statement next month . The policy statement will be updated when we actually open up the flat form which we have targeted to the early part of next year as we are developing and he consent process. They mutual funds platform will remain the same and they will be able to access that. As far as opening up the platform to e. T. F. And individual security, that is happening towards the beginning of the following year. The beginning of next year because we need to develop it to indemnify the board and the plan and defer from participant investments. And when that happens, we will update the i. P. S. Which will occur, the board voting or this new and more open selfdirected brokerage account . I believe we would bring it to the board to approve it before we opened it up, but again, the timing will not be for next month because there will be other i. P. S. Changes as a result of our transition so timeline would be october or november at the earliest, but certainly we can shoot to get the Investment Policy Statement in advance of opening up this new feature at the beginning of next year, or expanding it. That is the point i am trying to get at. People will see this and say it is not open until we complete several other administrative steps. We will say it wont be available before the end of the year but we are getting the boards approval to move in that direction. The concerns were raised at the Committee Level of does that expand the liability of the board by allowing, you know, folks to go in and do their own trading, and so this consent form is the language that basically says that if i choose to go through here, i accept all liability for my decisions. I will not blame the retirement board or the deferred Comp Committee or anyone else. So that is the important piece before we with roll this out. Will the board have to vote on that statement . No. But the board does have to vote on the i. P. S. . Yes and it does not open it up until they amend the i. P. S. We will make sure they get in front of the board before we open it up. Good point. We will definitely do that. It will not be september. Thank you. The motion has been amended and made and seconded. Time for Public Comments. Next year, there is probably an 80 chance that we will have a Worldwide Global recession. And in global recession, essentially Investment Capital should gravitate to low and moderate risk investments, not highrisk investments like hedge funds. Let me give you six indicators of a recession, and they are all in place right now. First one, reversal of the yield second reason, overvalued stock markets. Third reason, very low Interest Rates. Fourth reason, international instability. Fifth reason, increase in prices , sixth reason, one of my favourites, as im a big follower of warren buffett, there are 122 billion in cash. Why do they have 122 million in cash . Richard hathaway shall he only likes to have 20 billion in cash, not five times 100 on that i hope you all remember the advice that he gave our pension fund. Index funds will be a better investment than hedge funds. So please keep that advice in mind and take it. Thank you. Questions . We are not allowing alternative funds on this list. They are on the restricted list. Correct . Correct. Some people might see hedge funds as alternatives. There are no private places for that. I just wanted clarification as what we are allowing. Any Public Comment . Those in favor say aye. Aye. Opposed . Next item. Investment Performance Review of the deferred compensation program. Thank you. Commissioners, twice a year we attempt to brief the board of the performance of the investments that make up our core lineup of about 3. 6 billion in total assets. Callum will now walk you through the performance through june 30 th, 2019. We will jump right in. I have included the executive summary on the very first slide, just to recap some of the Key Highlights that i would like for you to take away anti elevator pitch version. The plan is valued at 3. 6 billion on june 30th. So everything in the report is through june. Keep in mind it represents a substantial increase of roughly 382 million since the start of the year. A lot of that came through investments. It has been a great period to be an investor pick investments in dollar terms over 361. There was a net cash inflow of 21 million for the year so far. The target date funds, you will see the performance when you look at the most conservative, out of the most aggressive. The roughly had the same return at about 3 . That is because stocks and bonds really performed very similarly with yields falling and bonds kept pace with the broad equity market. We do have two recommendations that we will be bringing to the Deferred Compensation Committee. The upcoming september meeting. Both are watchlist candidates. The first is galley art, which is a stable value manager, out roughly 1 billion or so in the plan assets. It is your most conservative manager. Earlier this year they did make some organizational changes. Theres four key leadership positions that are going to be retiring and various different trenches over the next three years or so. That wont become effective until next year, so i just did an onsite and their office is in minneapolis, minnesota. On sight a couple weeks ago and i met with the executive Management Team that will be coming online in 2020. Theres really only one new employee to galley yard, and he will be copresident , with that is something we will explore more that you might have seen in the news. The second item is Morgan Stanley. They manage two portfolios. One is a u. S. Read, the other is a global within the target date Component Fund and you will see their performance in a minute. They have underperformed in recent periods. Long story short, they really have a value discipline. They are not buying many of the overpriced or perceivably, from their perspective, overpriced real estate markets, and are really heavily invested now in malls, retail, new York City Office parks that are discounted relative to the market. That has always been their philosophy. In a nutshell they are looking for the market and the economy to evolve and change, and in this very Strong Equity market that we have been in, their style has really been out of favor. See that any minute. Lastly, the passive funds continue to perform and match performance as expected. We will look at the core offerings and a few slides. In terms of broad brush strokes for page two, clearly i think theres a lot going on in the global economy. I think the fed is noteworthy. They were great. That wasnt really expected last year towards the end of the year there was this perceived expectation that, hey, maybe they will stop raising and actually pause or lower. That came to fruition. The market is expecting additional decreases in Interest Rates. And just to keep in mind, the u. S. Rates were really out of normal with the rest of the globe. Most Interest Rates are actually lower in foreign economies. China is certainly remaining a question mark. Many are active, International Equity managers and they are taking stock of what the trade war might mean, what brexit might mean and other global politics. In terms of results, i think slides light for does a nice job in terms of slide four does a nice job in contrasting what has gone on in 2019 with a very difficult 2018. Theres a lot of colours on the chart, and that is really by design. There participants have at their disposal many tools. You will note on the left side of the page of the top youll see annual returns for 2013 going down to 20 going up to 2018, and each column shows a different asset class in the return. The bestperforming asset class in that calendar year is at the top, the worst is at the bottom. For instance, for 2018, u. S. Fixed income, which is essentially zero in emerging markets and an orange down at the bottom. Down 14 . 2019, we show the monthly returns, but we turn your attention to the yeartodate which is the last column. You will see a very different story from 2018. I will bounce back years is what they often call it with large markets. This is just like the Morgan Stanley fund, which we will take a look at. A very robust market. Fixed income, you will note in the second to the bottom, this is the u. S. Fixed income. Up sixpoint one . A very strong return. Again, it was somewhat of a risk period after a really 2018 really mapped how bad the Fourth Quarter was. It was up there september of last year that the markets were going gangbusters as well. I will turn your attention to slide nine. I think this is an important point, and it is something that mr. Coker had mentioned earlier in terms of the cycle that we have been in. It has been somewhat lopsided when we look at value versus growth. I am on page nine. This is the top chart. You can see it is a long period, but and it is a bit challenging to read, but if you stay with me , you will see when growth outperforms, the lines go down. Since Global Financial crisis, which is the red line, and that is kind of the point of the story here, it has been a very long period. It is almost 12 years of growth outperforming value versus years like post tech bubble to the Global Financial crisis, or the 1980s when the value outperforms growth. What we are trying to say here is we are kind of in an extreme period relative to a very long history. It is important to think diversification, value versus growth when we look at your plan lineup and evaluate the Investment ManagersMorgan Stanley. You will see on a very long term basis on slide nine, value over a long period of time actually compounds much better than growth. You will see the green bar is accumulative return of the russell 1,000 value index, and you can see it over this time period since the late nineties. Value has actually outperformed growth even though the last 11 years has really been a growth market. I will skip over slide ten. It really kind of makes the same it is just a different way to look at similar information his with another noteworthy point. Slide 11 captures the market values. Participants really kind of have a very conservative view, many of them with 28 and stable value , and largecap is certainly an equity asset class. Individual market values can be found on the next slide, slide 12. As i already noted, the plans have 3. 6 billion as of june. You will see the change and this is just the change for the one quarter, and so the net new investments just captures the net flows either going in or out of each fund and each asset class. The total plant had a net infill of 15. 2 million. Investment results over the last quarter improved by almost 90 million at the very bottom of the page. The way i would some it up here is investment returns have been fantastic and your plan is cash flow positive, which i guess our to hook two good trends. Moving into returns, page 13, just a note, these are the target date benchmarks. You will see the last quarter, as i mentioned, 3. 1 return. It did not matter if you were older or younger, you roughly had the same return, what you will see that when you go out since the inception period. The more risks you took so the 26551 had the highest return at 8. 8 per year. This is since the Third Quarter of 2012. Again, good absolute results, the relative results relative to the benchmark. We did add that two new funds, the 2060 and 2065 funds. They will show up performance next quarter. They started in april. Looking at the core lineup on slide 14, this is what we call our stoplight sheet and you will see, just in terms of definitions here, the legends down at the bottom righthand side, the green means it is in the top half relative to peers, yellow is in the third quartile, red is in the fourth quartile, and this is a very favourable report. One is the absolute returns have been very strong, next to each return is the actual ranking. For instance, the social equity fund ranks as the top performer in that category. You will note that there is some read in the active equity. So it is three quarters the way down and third from the bottom. This is really a valley oriented discipline valueoriented discipline manager managed by fidelity. A low stock fund. They are finding value overseas right now. It is up to 40 in international securities. That obviously has been a headwind given the u. S. Has been stronger than the international markets, but they use the p. M. As an example. They really have strong conviction that the market is getting pretty crappy. I have to go out the u. S. To find good value. I could go into much more detail i was going to hit the watchlist item on the next slide, but dont let me skip over your favourite slides. [laughter] you will see the real estate fund. This is the Morgan Stanley. It certainly gets called out by the red colour, which is fourth quartile. You will see over the last year it was up 3 , right in the 97 th percentile. The index was up over 11 . Again, a lot of this is just a discipline of looking. What they do is they take every property and value it and compare it to the nad. For instance, by their research, they have shown new York City Office properties are 35 undervalued or discounted relative to the n. A. D. That is attractive. That is an overweight for them. Those two areas have really been out of favor, especially over the last year or so. That is an example of something we are digging into in a lot more detail based on their conviction and philosophy. But really, nothing has changed in the organization. So we will take that up with the Deferred Compensation Committee in much more detail. The next slide just looks at the Component Funds. These are the specialized funds that are components within the target date funds that russell utilizes. You will see again, a very good story. Green across the board. These tend to be much more volatile. They go from red to green very quickly. That is just the nature of many of these markets. They are very narrow and specialized. But third from the bottom, again , that is Morgan Stanley, and you can see it stands out. This is the global fund. Again, it is roughly 53 in the u. S. And has some of the same issues that i already commented on before. Dfa world tends to be more valueoriented price to book sensitive type fund and it makes sense that growth really has been in favor for a very long and pronounced period in recent times. We expect them to underperform in that type of period. The question is, if value comes back in favor, we expect d. F. A. To really bounce back as an example. I will pause there and see if theres any questions, but that concludes my highlevel report. Board questions . I will start with one. Morgan stanley, compared to their peers in that value silo, how are they . This is a broad regroup. Value to value, how did they do .