Items. Ill make the standard order of Public Comment and instructions when we get to Public Comment at 3 30. Do we need order to go into closed session. Public comments . Seeing none, if someone wouldnt mind closing the doors. Ill turn the flor over to mr. Coker of the eight items that were listed on the closed session item there shall only be seven. With the matrix would be number seven we need a motion to cover the attorneyclient privilege as we go into closed session is there such a motion so moved second. All those in favor say aye. Public comment. All those in favor say aye. Aye. So, im going to read the motion approved by the board in regards to gregory latman versus the retirement board. The motion that was approved reads as follows set aside the hear offices november 1st, 2019 denying the application in march 2017 denying the petition for the hearing and remand the case in retirement system staff. Remand the case of the office of administrative hearings foray signment to a hearing officer as a previously assigned hearing officer retired and request the hearing officer without hearing consistent with the courts determination of incapacitated for the performer of the fire lieutenant job due to his hearing law and to deny the disability and third remand for approval at the next meeting after issues of that decision. And well have to report the vote on this matter. Right. Not to just disclose any other discussions in closed session. Do we report out the vote or do we have to vote again ill make that information . All those in favor say aye aye Public Comment. Yes. On the top he doesnt want to comment. Who made the second, im sorry i did thank you all those in favor say aye aye. Opposed. Ok, well do Public Comment and well do action items. Standard rules apply. Does anyone have a Public Comment they wish to make . My name is john stenson im a 44year member of a retirement system. At the last Board Meeting, i told you Board Members that in the future, you should not hire any Investment Consultants or chief Investment Officer who tells us its not possible to get a 7. 4 retain on investments without investing in height risk investment i. E. Hedge funds. I would like to give the investment retained of two investments going back to 1926, thats 93 years and three years before the Great Depression when stocks well 90 id like to give you the return on the van guard model portfolio that just consists of stocks and bonds for the last 93 years. 100 93 average annual, 10. 2 and 100 in bonds and 5. 3 return. 50 bonds and 5 stocks and 8. 2 annual returns and 60 stocks and 40 bonds, 8. 6 remain. 80 stocks, 20 bonds, 9. 4 return. For the past 10 years, they pass investments just having a combination of stocks, bonds and real estate about average retain of 11. 8 detained so thats why i say to you Board Members, do have anybody say they cant get you a earned 7. 4 return without having any highrisk investment. Thank you. Any other Public Comment . Im not going to follow the normal sequence because i do not want to lose the quorum. First item is 13, review and acceptance of the july 1st, 2019 supplemental cola analysis. Good afternoon commissioners, analysis has been placed before you and we have Something Different this year. Although we have charter defined excess earings as of july 12019, we did not have enough to pay the 3. 5 supplemental cola but we have enough to pay the next level 3 and just as a little interesting background, the maximum of 3. 5 has only been in existence since 2009. Before that, the maximum was 3 . And if we have any questions that i can answer i would be happy to do that. Motion to adopt staff recommendation second. Any further board questions. This action is necessary in order for staff to do the calculation and issue the check. Any Public Comment . All those in favor say aye aye opposed. Thank you. Item 5 the minutes of the previous meeting. Is there any corrections, additions or deletion move to approve second Public Comment. All those in favor say aye aye. Opposed. Consent calender. Is there any item set aside for separate consideration . A motion to adopt i move to adopt all the items on the consent calender as presented your second. Second. All those Public Comments . All those in favor say aye aye opposed. I was looking for a couple people to come and speak about item number nine but theyre not here yet so well go to item number 14 this is anna just of an industrial disability pension for joshua phillips, based on a Workers Compensation appeals board determination that the disability is rated at 90 . We would ask the board approve this adjustment moved to approve second any questions . Any Public Comment . All those if favor say aye aye opposed. Item 15. The same for sean hinson, industrial disability where the Workers Compensation appeals board determined a rating of 90 and were requesting the pension from 50 to 90 move to approve. Second. Any questions . Any Public Comments . All knows favor say aye aye. That takes us to item number nine. Yes, you will and i just want to remind the board this is a long document and weve had it in place for many years. Lets do some questions though its technically an action item. Ill make this comment up front. This is a living document. Were always either expanding it or editing or sometimes moving it around so it is differently because this one document is combined with a couple other things like the investment guidelines that we issue for our managers. Unless you had all four or five documents you may not perceive where some of these sections are being moved to. Nothing is being deleted. With one exception. Get ready to start. Go. Very good. Thank you very much, Board Members. Sem reof the changes is listed on pages one and two. You will see theres much more its much more reorganization and substance in addition to what you see here. Each asset class other than Public Markets have their own Investment Policies statement. We also plan to have public equity and Public Markets and also have their own investment policy guidelines and this document will, in the longterm, be for the management of the trust as a whole. Im going to ask curt and anna to guide us through the changes. Apologies for missing the opening remarks. Just to step back a moment. Its the framework of the manager of the spurs assets. Its meant to assist the retirement board in the monitoring of the plan. It is divided into five sections, goals, beliefs, practices and procedures and strategic allocation including definitions and duties and responsibilities. This document was updated just over two years ago and were proposing further changes but the really more a matter of housekeeping which is described earlier and we highlighted the largest changes and ill go through them quickly. We introduced investment beliefs. The key principals that drive our investment philosophies. We reorganized the document into five sections and the prior document in our opinion didnt flow particularly well. We removed the specific e. S. G. And proxy policy and as you may recall, each those areas have their own standalone policies. We approved the e. S. G. Policy at the november Board Meeting and i believe its adopted in march of 2019. It is our intent over the longterm as bill described is to move the Public Markets guidelines out of this document and they have their own stand alone guidelines but were not doing that now. In addition, we have removed tho discontinue our commission and recapture program from reasons noted in the staffs memo and any p. C. Can comment. Its just a practice thats no longer popular or prominent among Pension Plans. We have a formel annual requirement for each as set class and public equity real assets and absolute return, private equity and Risk Management or liquidity in Risk Management will have separate updates for the particular as set classes or subjects each year the first of these will begin in january request public fixed income and public equity. We modified the gross long and short, the allowable rages for the portfolio. As you may recall, weve done a bit in terms of adding active extension strategies this year and late last year. This just reflects the addition of those strategies. And we updated some of the core duties among each of the participants of the plan. I appreciate the Board Members dedicated to your staff and we had oneonones on going over the entire suggestion and the marked up copy and it was appreciated by thats the ex at the present time of my comments. Beef given you a clean copy and the marked copy. The marked copy is difficult to read but many of the changes that were made were just moving areas was a process all the m. D. S in each asset class as well as anna myself and any p. C. Were all involved. It was very interesting ok. Ellen has anything to add would we corporated with an apc . The one thing i would add, every plan has a document like this and its not only useful for the board, but it is a Public Document to so it informs those about your plan. Its a good thing. The addition of a belief section is important because it says how were going to operate this plan so im very supportive of that. I do want to emphasis that those beliefs should be the beliefs not just of staff or me or someone else, but your beliefs so that is important and as joe said, this is a document that will grow and if there are other things that need to be added or modified, its more than acceptable. Its huge but we can talk about this for weeks or months but we have been use north for a while. Ill make a motion and approve the recommended changes to the San Francisco city and county Employee Retirement systems policy statement. Second. Do you approve the edit . First of all, the original document was called the investment belief and policy. They were not delineated. Which is good theyre there. Its not that i have a problem with the as written, but theres a couple things that should be released that are not in this section or some place else. First one is d. S. G. Its been moved and fine but the very first statement starts with the word belief. That should be put in the investment belief and its a statement as well as if were going to try and incorporate the whole concept of all those things into all our Investment Decisions which were starting to do. We should put that up front. Not the whole section just one. Part two i pom bullet point throw about volume activity which is a correction statement however the issue of uncertainty, were also dealing with all the time. A statement such as you know certainty in the longterm increases. Its something we should be aware of. Whether or not we want to put it in the way to deal with uncertainty is we consider all possibilities and the probability of those possibilities. Its something we do but weve never stated it. Its up to the belief issues so people know were not just looking at one set of facts or opportunities at one time. You are out there looking for things. What is going to be available 10 or 20 years ago like the Artificial Intelligence that you brought to some of the speakers. Why are we listening . Its where we have to figure out how to invest in the future. The third item belongs in the belief section. You talked about it in the pressure. Its did our decision. Organizational decision quality is a result of following or getting quality into the six requirements for good decisions. As part and process that is part people. To get it all done. We make decisions all the time. The question is do we make quality decisions . Do we make good decisions. Its a process. Its not a difficult. If we believe that, it is a signal about what we should be talking about in the future and the board who should focus on the Strategic Issues while they expect all our staff to do things. Sorry i dont have pure, Crystal Clear language but this is coming up during the boards next retreat. I thought it was an opportunity to Start Talking about the investment. Commissioner, toward that end, is that a amendment to the document or im letting people know now. I havent clear language to distribute, people can read and since the Board Members have a week to look at your work, i dont expect them to digest what i put out in 10 seconds. This is a dock. Its not stopping anything. Carry on. So, what we can do is well take your suggestion and when we bring it back most likely after the retreat, well encloud those with a particular language theres a lot more coming up on this subject area this is a living document. This can still be voted on it sounds like. We can bring it out with any as set allocations changes or anything that need to be, we need to amend the document, yeah. Ok. Any further questions . I just have one question. On page 23 of the red light version, theres a change and it says, for the general consultant. This is for staff and making recommendations to the board and staff and do you view a change in your role . We are your consultant and we talked with joe about this and there was an option to change the individual duties listed under the general consultant or add the words which we did at the beginning of the paragraph to support the board through working with so with the understanding it was do do something with staff and we have an independent duty to you but we have to execute it by working with staff so that was the compromise and otherwise we have changed those duties and it was not worth it and just adding the simple line that we are accountable to the board for those activities are you still the boards consultant or staff consultant . Boards consultant. I cant be an effective consultant to the board without having a constructive working relationship. Which is why bullets points 14 are its something the board has talked about b thank you. In a table of organizations, for this whole operation, we saw it was investments and we didnt do the whole organization you would see a solid line from the consultant to the board. Theres a couple consultants that work with staff so when you see the lines, its clearly depicts the Relationship Issue did who works for and who works who and more importantly the be jeb tive decision quality is collaboration between staffing, between consultant and board and board and staff. Thats how it has to work. If were going to be good investors. A motion has been made and seconds, Public Comment . All the those if favor say aye. Aye. Opposed. Give me a second to get the calender back. That concludes the action items so we can go back into items seven report of americans on the retirement end for the quarter end of september 30th, 2019. Very good. Im going to invite allen to take this from start to finish in terms of our performance. You have the 9 30 performance report providing time weighted for periods ending 9 30 including the First Quarter of the 2020 fiscal year, it wasnt a Strong Equity market so the russell 3,000 which is all domestic security is up 1 but since this report was another 5. 3 so a relatively weak quarter but in an ongoing Major Movement up in equity. Well see the returns for three quarters you will look really good and for one year, because you had the Fourth Quarter of last year in the one year, you look very good because it wasnt a Strong Equity market. When we do this again, thats going to change because that one quarter being dropped, presuming it changes into a different environment. Im going to skip over the comments on the environment. Its very similar to what its been over the last 10 years. Steady Economic Growth. This is the longest upward growth in Economic Activity that weve had in recent lines but its been a low rate of growth. When you look at the economic statistics, g. D. P. Growth is positive but its dropped below three and thats what occasioned concerns in the fed and in the economist in general as to whether were going to see something worse Going Forward. As you know, the fed increased or decreased Interest Rates again and dropping the fed funds rate another 25 basis points. That led to a reaction in the long market where the 10year treasury yield dropped down to 1. 7 . Its close to the all time low. The good news is when you look back at the return of bonds over the last year, when you hold the boppedbond and Interest Rates d, you are receiving a higher rate of interest than a newly issued bond that makes your bond attractive people pitted up in price. So what you will see if you look on page its the third page. Market environment q3, 2019, if you look at one year return for the barclay is 10. 5 in bonds. Weve been telling you part of our problem investing Going Forward is a low return in bonds and just as much as we can feel good if we held the bond through now, if were trying to make a new investment in bonds looking forward, were not going to get 10 and were going to get something close tore 1. 7 . And we will address and your january meet examining row viced economic outlooks for