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San Francisco Employees’ Retirement System RETIREMENT BOARD MEETING MINUTES Wednesday, November 12, 2014 1145 Market Street, 6 th Floor San Francisco, CA 94103 1:00 p.m. MISSION STATEMENT San Francisco City and County Employees’ Retirement System is Dedicated to Securing, Protecting and Prudently Investing the Pension Trust Assets, Administering Mandated Benefit Programs, and Providing Promised Benefits. RETIREMENT BOARD MEMBERS President Victor Makras Vice President Malia Cohen Commissioners Leona Bridges Joseph Driscoll Herb Meiberger, CFA Wendy Paskin-Jordan Brian Stansbury Jay Huish Executive Director
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Page 1: San Francisco Employees’ Retirement System RETIREMENT ...

San Francisco

Employees’ Retirement System

RETIREMENT BOARD

MEETING MINUTES

Wednesday, November 12, 2014 1145 Market Street, 6th Floor

San Francisco, CA 94103

1:00 p.m.

MISSION STATEMENT

San Francisco City and County Employees’ Retirement System is Dedicated to Securing, Protecting and Prudently Investing the Pension Trust Assets, Administering Mandated Benefit Programs, and Providing Promised Benefits.

RETIREMENT BOARD MEMBERS

President Victor Makras

Vice President Malia Cohen

Commissioners Leona Bridges

Joseph Driscoll

Herb Meiberger, CFA

Wendy Paskin-Jordan

Brian Stansbury

Jay Huish Executive Director

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DISABILITY ACCESS

The San Francisco Employees' Retirement System is wheelchair accessible. Accessible seating is available for

persons with disabilities. To obtain a disability-related modification or accommodation, including large print

agendas, American Sign Language interpreters, FM sound amplification system and auxiliary aids or services,

please contact Norman Nickens at (415) 487-7025 at least two (2) business days before the meeting.

There is accessible parking in the vicinity of 1145 Market Street at Civic Center Plaza. Accessible MUNI

lines are available at the corner of Market Street and 9th Street. The closest accessible MUNI /BART station

is Civic Center Station.

All materials to be considered or acted upon by the Retirement Board shall be available for public review 24

hours prior to the Retirement Board meeting. For additional information, please contact Norman Nickens,

Executive Assistant at (415) 487-7025.

In order to assist the City’s efforts to accommodate persons with severe allergies, environmental illness,

multiple chemical sensitivity or related disabilities, attendees at public meetings are reminded that other

attendees may be sensitive to various chemical based products. Please help the City to accommodate these

individuals.

The ringing of and use of cell phones, pagers and similar sound-producing electronic devices are

prohibited at this meeting. Please be advised that the Chair may order the removal from the meeting

room of any person(s) responsible for the ringing or use of a cell phone, pager, or other similar sound-

producing electronic devices.

Know Your Rights Under the Sunshine Ordinance

(Chapter 67 of the San Francisco Administrative Code)

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions,

boards, councils and other agencies of the City and County exist to conduct the people's business. This

ordinance assures that deliberations are conducted before the people and that City operations are open to

the people's review. FOR MORE INFORMATION ON YOUR RIGHTS UNDER THE SUNSHINE ORDINANCE OR

TO REPORT A VIOLATION OF THE ORDINANCE, CONTACT THE SUNSHINE ORDINANCE TASK FORCE.

Sunshine Ordinance Task Force

City Hall

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1 Dr Carlton B. Goodlett Place, Room 244

San Francisco, CA 94102-4689

(415) 554-7724

by fax at (415) 554-7854

or by email at [email protected]

Citizens interested in obtaining a free copy of the Sunshine Ordinance can request a copy from Mr.

Darby or by printing Chapter 67 of the San Francisco Administrative Code on the Internet,

http://www.sfgov.org/sunshine/

If any materials related to an item on this agenda have been distributed to the Retirement Board (or

committee) after distribution of the agenda packet, those materials are available for public inspection at

SFERS, 1145 Market Street, 7th Floor during normal office hours.

Lobbyist Registration and Reporting Requirements

Individuals and entities that influence or attempt to influence local legislative or administrative action may be

required by the San Francisco Lobbyist Ordinance (San Francisco Campaign and Governmental Conduct

Code sections 2.100 – 2.160) to register and report lobbying activity. For more information about the

Lobbyist Ordinance, please contact the Ethics Commission at 25 Van Ness Avenue, Suite 220, San Francisco,

CA 94102, telephone (415) 252-3100, fax (415) 252-3112 and web site: www.sfgov.org/ethics

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OPENING CALENDAR

President Makras called the meeting to order at 1:12 PM. Pledge of Allegiance

Roll Call Commissioner Victor Makras 1:12 PM

Commissioner Malia Cohen 1:12 PM Commissioner Leona Bridges 1:12 PM Commissioner Joseph D. Driscoll 1:12 PM Commissioner Herb Meiberger, CFA 1:12 PM

Commissioner Wendy Paskin-Jordan 1:12 PM Commissioner Brian Stansbury 1:12 PM

General Public Comment President Makras called for general public comment.

Jamilah Din, Laguna Honda Hospital employee, spoke in opposition to investing in hedge funds. Glen Van Lehn, Service Employees International Union (SEIU) West Bay Retirees, spoke in opposition to investing in hedge funds and urged an open and inclusive process. Cindy Pun, active employee, spoke in opposition to investing in hedge funds, the perceived lack of responsiveness to member concerns, urged greater transparency and submitted 350 petitions opposing investment in hedge funds. Kay Walker, retiree, addressed the Board regarding risk management as provided for in the Charter, spoke in opposition to investing in hedge funds, and noted CALPERS recent withdrawal from hedge funds. Sylvia Alvarez-Lynch discussed her recent meeting with Mr. Huish and Mr. Coaker, requested that the October minutes reflect that she submitted petitions to the Board in opposition to investing in hedge funds, and noted that the Board has not responded to the July letter from SEIU. Ms. Alvarez-Lynch presented the Board with additional petitions signed by members opposed to investing in hedge funds (petitions attached to these minutes). David Williams, retiree, spoke in opposition to investing in hedge funds.

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Claire Zvanski, Retired Employees of the City and County of San Francisco (RECCSF), discussed a recent hedge fund presentation held by RECCSF, spoke in opposition to investing in hedge funds, and recommended that the Board consider a smaller allocation if hedge funds are to be considered. President Makras made several announcements. First, he congratulated Supervisor Cohen on her reelection to the Board of Supervisors. Second, he announced that he had requested the Executive Director to prepare and distribute by December 1, 2014, a response to the letter received by the Board from the President of SEIU Local 1021. Finally, President Makras announced that he was continuing to the call of the Chair the following agenda items: #2 – Approval of the Minutes of the October 8, 2014 Retirement Board Meeting, #5 – Review and Approval of Request for Proposals for Investment Management Services for Core Plus Fixed Income, #13 – Educational Presentation by the Office of the City Attorney on Gift Rules and Reporting Requirements, and #14 – Discussion of Board Communications Policy. With regard to the minutes of the October 8, 2014 Board meeting, he requested that staff revise the minutes to reflect changes requested by Commissioner Meiberger, CFA, the petitions submitted by Ms. Alverez-Lynch, and more detail on items #4, 5, and 6 (Characteristics of Potential Hedge Fund Investments; Asset Allocation Recommendations from Board Members and Staff; and, Presentation by and Approval of Staff Recommendation to Retain Institutional Shareholder Services (ISS) for Proxy Voting Services), including expanding the comments from Angeles Investment Advisors on item #6, and to include a statement by Commissioner Driscoll that was not included in the minutes.

11122014-01 Action Item Approval of the Minutes of the October 8, 2014

Retirement Board Meeting

Documents provided to the Retirement Board prior to the current meeting: Draft Minutes of the October 8, 2014 Retirement Board Meeting

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This item was continued.

CONSENT CALENDAR All matters listed hereunder constitute a Consent Calendar, are considered to be routine by the Retirement Board and will be acted upon by a single vote of the Retirement Board. There will be no separate discussion of these items unless a member of the Retirement Board so requests, in which event the matter shall be removed from the Consent Calendar and considered as a separate item.

11122014-02 Action Item Consent Calendar

11122014-02a Action Item Voluntary Retirement Board List No. 5-14

11122014-02b Action Item Decisions of Hearing Officers

Ana V. Barrios Effective Date: 3/1/12

8108 Sr. Legal Process Clerk Sheriff

Ordinary Disability Retirement Denied

Janet S. Binalinbing Effective Date: 11/8/14

1657 Accountant IV DPH-LHH

Ordinary Disability Retirement Granted

Delia B. Cachapero Effective Date: 2/1/12

2320 Registered Nurse DPH-SFGH

Ordinary Disability Retirement Denied

Themma A. Cruz Effective Date: 9/1/13

1404 Clerk Human Services

Ordinary Disability Retirement Granted

Dan F. Dente Effective Date: 6/1/10

H30 Captain Fire

Industrial Disability Retirement Granted

Constance D. Flack Effective Date: 6/8/13

2736 Porter DPH-LHH

Ordinary Disability Retirement Granted

Raymond S. Glover Effective Date: 7/1/12

2303 Patient Care Assistant DPH-LHH

Ordinary Disability Retirement Granted

Lisa Gutierrez Effective Date: 8/1/14

1636 Health Care Billing Clerk II DPH-LHH

Ordinary Disability Retirement Granted

Milan Kangrga Effective Date: 7/24/10

Q3 Police Officer II Police

Industrial Disability Retirement Denied

Clyde A. Livingston Effective Date: PERS

8320 Counselor, Juvenile Hall Juvenile Probation

CAL-PERS - Disability Retirement Granted

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Jonathan Y. Lucero Effective Date: PERS

8304 Deputy Sheriff Sheriff

CAL-PERS - Disability Retirement Granted

Norma E. Nelson Effective Date: 2/18/12

1824 Prin. Administrative Analyst Port Comm.

Ordinary Disability Retirement Denied

Rosaline N. Nnachetam Effective Date: 4/6/14

4321 Cashier II Treasurer/Tax Collector

Ordinary Disability Retirement Granted

Scheryl R. Saulsberry Effective Date: 12/1/13

9163 Transit Operator MTA

Ordinary Disability Retirement Granted

Frances Smith Effective Date: 5/1/13

9163 Transit Operator MTA

Ordinary Disability Retirement Granted

11122014-02c Action Item Petition for Rehearing

Milan Kangrga Effective Date: 7/24/10

Q3 Police Officer II Police

Industrial Disability Retirement Denied

Norma E. Nelson Effective Date: 2/18/12

1824 Prin. Administrative Analyst Port Comm.

Ordinary Disability Retirement Denied

Documents provided to the Retirement Board prior to the current meeting: Voluntary Retirement Board List, Hearing Officer Decisions

President Makras called for public comment. There were no comments from the public. Action: Moved by Commissioner Meiberger, Seconded by Commissioner Cohen to Approve the Consent Calendar.

Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

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11122014-03 Discussion Item Retirement Board Member Reports and Comments

The Council of Institutional Investors – Fall Conference, September 29 - October 1, 2014, Los Angeles, CA, attended by Commissioner Leona Bridges

Documents provided to the Retirement Board prior to the current meeting: Conference Attendance Report President Makras accepted Commissioner Bridges’ written report on her attendance at the Council of Institutional Investors – Fall Conference, September 29 - October 1, 2014, Los Angeles, CA. President Makras called for public comment. There were no comments from the public.

This was a discussion only item

INVESTMENT CALENDAR

11122014-04 Action Item Approval of Revised Guidelines for Mondrian

Emerging Market Equities

Documents provided to the Board prior to the current meeting: Staff and Angeles Investment Advisors Memoranda, Draft Guidelines

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William J. Coaker Jr., Chief Investment Officer, Bob Shaw, Managing Director for Public Markets, and Anna McGibbons, Angeles Investment Advisors, presented an oral and written report on this item. Mr. Shaw reported that Mondrian Investment Partners Limited has managed an emerging market equities portfolio ($308 million as of September 2014) for SFERS since January 2006. Mondrian has requested a change in the permitted range of securities held from the current 35-45 to 40-60. Staff and Angeles Investment Advisors support and recommend the requested change to Mondrian’s investment guidelines. President Makras called for public comment. There were no comments from the public. Commissioner Meiberger, CFA, noted the potential for investment in China thorough the China A share market. Ms. McGibbons confirmed that the Hong Kong-Shanghai Connect program scheduled to start in mid-November would give investors access to approximately 300 companies that are currently only available through a Qualified Foreign Institutional Investor allocation. Action: Moved by Commissioner Meiberger, Seconded by Commissioner Paskin-Jordan to Approve Revised Guidelines for Mondrian Emerging Market Equities

Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

11122014-05 Action Item Review and Approval of Request for Proposals for Investment Management Services for Core Plus Fixed-Income

Documents provided to the Board prior to the current meeting: Staff and Angeles Investment Advisors Memoranda and Draft RFP

This item was continued.

11122014-06 Chief Investment Officer Report

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Documents provided to the Retirement Board prior to the current meeting: CIO Report William J. Coaker Jr., Chief Investment Officer, , presented an oral and written report on this item. Mr. Coaker reported that the Fund was valued at $20.2 billion as of October 31, 2014. Mr. Coaker made the following disclosures regarding investments approved in closed session:

1. At its meeting on September 10, 2014, the Retirement Board approved in closed session an investment of up to $35 million in Canaan X, L.P. The investment was approved by the following vote: Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury SFERS’ $26 million investment in the fund closed on October 15, 2014. SFERS’ investment in the fund is classified as a multi-stage venture capital investment within SFERS’ private equity portfolio, and is SFERS’ third investment with Canaan Partners.

2. At its meeting on October 8, 2014, the Retirement Board approved in closed session an investment of up to $50 million in Wynnchurch Capital Partners IV, L.P. The investment was approved by the following vote: Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury SFERS’ $25 million investment in the fund was accepted by Wynnchurch and closed on October 23, 2014. SFERS’ investment in the fund is classified as a special situations fund within SFERS’ Private Equity Portfolio, and is SFERS’ first investment with Wynnchurch Capital.

3. At its meeting on October 8, 2014, the

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Retirement Board approved in closed session an investment of up to $50 million in Hahn & Company II, L.P. The investment was approved by the following vote: Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury SFERS’ $50 million (??) investment in the fund closed on October 4, 2014. SFERS’ investment in the fund is classified as an Asia-focused middle-market buyout fund within SFERS’ private equity portfolio, and is SFERS’ first investment with Hahn & Company.

Mr. Coaker announced the appointment of Ms. Eunice McHugh as Senior Portfolio Manager of Fixed Income, and that SFERS continues its recruitment for Senior Portfolio Managers for Public Equity and Real Assets. President Makras called for public comment. There were no comments from the public. Commissioner Driscoll expressed appreciation to staff for the detail provided in reporting out the closed session items. Commissioner Paskin-Jordan requested additional information on private real estate performance reporting by manager.

DEFERRED COMPENSATION PLAN CALENDAR 11122014-07 Discussion Item Deferred Compensation Committee Report

Documents provided to the Retirement Board prior to the current meeting: Deferred Compensation Committee Report

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Commissioner Bridges, Chair of the Deferred Compensation Committee, presented an oral and written report on this item. At the meeting of October 15, 2014 the Deferred Compensation Committee:

Reviewed and approved the minutes of

the August 20, 2014 Deferred Compensation Committee meeting;

Reviewed and approved replacement of PIMCO Total Return Fund with Baird Core Plus Bond Fund as the SFDCP Core Bond Manager (ratification is on the agenda of the November 12, 2014 Retirement Board meeting);

Reviewed and approved recommendation to revise Galliard’s Investment Guidelines for the SFDCP Stable Value Fund (approval is on the agenda of the November 12, 2014 Retirement Board meeting);

Discussed developing a SFDCP Mission Statement;

Reviewed and approved a recommendation to eliminate SFDCP Mid-Cap Value and Mid-Cap Growth Funds (approval is on the agenda of the November 12, 2014 Retirement Board meeting);

Discussed a request from the plan sponsor to consider allowing employees to borrow against their 457(b) account balance. Staff were directed to prepare an analysis and recommendation for consideration by the Committee;

Received an update on GoalMaker implementation; and,

Scheduled their next meeting for Wednesday, December 3, 2014.

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At their meeting, Jay Huish, Executive Director, announced that Julia Durand has resigned the position of Deferred Compensation Manager to explore other opportunities. Caryn Bortnick, Deputy Director, and Maria Newport, Retirement Administrator, will provide management and supervision for the SFDCP until a permanent replacement is appointed. Mr. Huish offered to have Ms. Newport present at future Board meetings when Deferred Compensation items are presented. President Makras called for public comment. Claire Zvanski, RECCSF, reported a participant complaint regarding the Third Party Administrator. Mr. Huish indicated that Caryn Bortnick, Interim Deferred Compensation Manager, would follow up on the complaint. Action: This was a discussion only item

11122014-08 Action Item Review and Ratification of Replacement of PIMCO Total Return Fund with Baird Core Plus Bond Fund as the SFDCP Core Bond Manager

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Documents provided to the Retirement Board prior to the current meeting: Staff and Angeles Investment Advisors Memoranda Caryn Bortnick, Deputy Director and Interim Deferred Compensation Manager, and Anna McGibbons, Angeles Investment Advisors, presented an oral and written report on this item. Ms. Bortnick reported that staff and Angeles Investment Advisors provided written and oral presentations at the Deferred Compensation Committee meeting on October 15, 2014 regarding significant changes in the management of the PIMCO Total Return Fund, a SFDCP Core Bond offering since 2004 and part of the custom Target Date Funds since 2012. As widely reported, PIMCO co-founder and CIO, Bill Gross left the firm on September 26, 2014 after 43 years. Gross was the sole portfolio manager of the PIMCO Total Return Fund since inception. SFDCP members held $273 million, or 10% of total Plan assets, in the fund at the end of September 2014.

Committee members engaged in discussion with staff and Angeles Investment Advisors regarding the impact of Gross’ departure and the rationale for replacing the Total Return Fund. Among other factors, fees for the Baird Core Plus Fund are lower, 0.30% vs. 0.46% for PIMCO. The Committee voted to recommend replacing the PIMCO Total Return Fund with Baird Core Plus Fund as the SFDCP Core Bond Manager. During the meeting, the Committee, staff, and Angeles discussed that it might be in the participants’ best interests to move the assets prior to the November 12, 2014 Retirement Board meeting. Since the Committee meeting, there have been large liquidations from the PIMCO Total Return Fund. Since staff and Angeles could not anticipate whether other large investors planned to liquidate their holdings, a decision was made to move the assets effective November 4, 2014.

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President Makras called for public comment. There were no comments from the public. Commissioner Meiberger, CFA, inquired regarding liquidation activities of the PIMCO fund that occurred prior to the transition to be ratified. He noted that bonds are highly liquid. Ms. Bortnick noted Ford, Schwab and other large investors, including public pension plans, have withdrawn from PIMCO in the last two month. Staff and the Committee had discussed the availability of a lower cost (lower fees), better option for participants, and the possible need to transition from PIMCO to protect the interest of participants in advance of the Board meeting. Ms. McGibbons noted the PIMCO fund has been reduced from over $300 billion to approximately $175 billion, with further withdrawals currently being planned. Commissioner Bridges noted that many major public funds have already exited the Total Return Fund, and a better option was available for the Committee’s consideration. Commissioner Meiberger discussed the recent staff transitions at PIMCO and the bench strength of the remaining staff. Ms. McGibbons noted that Bill Gross left the firm on September 26, 2014 and had served as the sole manager for the PIMCO Total Return Fund. The three managers named to replace him do not have a track record of working together. Commissioner Meiberger, CFA, recommended that the Board be informed in advance when a manager is transitioned in advance of formal Board action. Ms. McGibbons and Jay Huish, Executive Director, noted that during their meeting the Committee, staff, and Angeles discussed that it might be in the participants’ best interests to move the assets prior to the November 12, 2014 Retirement Board meeting. Mr. Huish agreed to inform the Board in advance in the future. Commissioner Paskin-Jordan noted that she had had recent discussions with PIMCO staff and spoke in support of the transition. She discussed some of the internal factors that may have influenced PIMCO’s recent performance.

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Commissioner Driscoll noted that the performance and personnel issues with PIMCO were discussed by the Deferred Compensation Committee. Commissioner Stansbury spoke in support of ratifying the manager transition. Commissioner Makras spoke in support of ratifying the manager transition, and requested additional information on the timing of the transition. Ms. McGibbons noted the volume of the recent exits from the fund. Commissioner Makras inquired if a bid process would now be required. Ms. McGibbons noted that a bid process was not required, and that Angeles has already screened and conducted due diligence on replacement managers and recommended Baird Core Plus Bond Fund, which the Deferred Compensation approved and was before the Board for ratification. Action: Moved by Commissioner Driscoll, Seconded by Commissioner Paskin-Jordan to Ratify Staff’s Decision to Replace PIMCO Total Return Fund with Baird Core Plus Bond Fund as the SFDCP Core Bond Manager Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

11122014-09 Action Item Review and Approval of Recommendation to Revise Galliard Guidelines for the SFDCP Stable Value Fund

Documents provided to the Retirement Board prior to the current meeting: Staff and Angeles Investment Advisors Memoranda, Revised Galliard Investment

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Caryn Bortnick, Deputy Director and Interim Deferred Compensation Manager, and Anna McGibbons, Angeles Investment Advisors, presented an oral and written report on this item. Ms. Bortnick reported that staff and Angeles Investment Advisors provided written and oral presentations at the Deferred Compensation Committee meeting on October 15, 2014 regarding changes proposed by Galliard to the guidelines for the SFDCP Stable Value Fund. Galliard requested the changes to clarify that Collective Investment Funds/Pooled Separate Accounts are permitted securities at the fund level. Currently, Collective Investment Funds/Pooled Separate Accounts are in the asset guidelines as permitted securities.

The Managed Income Fund (“MIF”) is a stable value collective fund managed by Galliard that owns cash, separate account contracts, and security backed contracts. It is currently 100% self-wrapped. Presently, when allocation is made to the MIF in the Stable Value Fund, it has been treated as subject to the wrap contract with American General. Galliard’s requested change will remove the extra wrap layer, saving participants approximately 2.2 basis points.

Galliard earns no incremental fee from the SFDCP when it allocates to the MIF in the Stable Value Fund.

The Committee voted to recommend that the Retirement Board approve revising the Galliard Guidelines. President Makras called for public comment. There were no comments from the Public. Commissioner Meiberger discussed the role of wrap protections. Action: Moved by Commissioner Stansbury, Seconded by Commissioner Meiberger to Approve Revised Galliard Investment Guidelines Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

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11122014-10 Action Item Review and Approval of Recommendation to Consolidate Mid-Cap Funds

Documents provided to the Retirement Board prior to the current meeting: Staff and Angeles Investment Advisors Memoranda

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Caryn Bortnick, Deputy Director and Interim Deferred Compensation Manager, and Anna McGibbons, Angeles Investment Advisors, presented an oral and written report on this item. Ms. Bortnick reported that staff and Angeles Investment Advisors provided written and oral presentations at the Deferred Compensation Committee meeting on October 15, 2014 discussing the merits of streamlining some of the fund options offered to participants. The Mid Cap Value and Mid Cap Growth Funds offer market exposure that is generally available in other options. Both funds have lower participation rates. The Mid Cap Growth Fund has had performance and personnel turnover issues.

The Committee voted to recommend that the Retirement Board approve eliminating Mid Cap Value and Mid Cap Growth investment options from the SFDCP. If approved, participant holdings in these funds will be transferred to the Mid Cap Core Fund, which will remain as an investment option. In addition, both of the eliminated funds are currently components of the Target Date Funds. The Deferred Compensation Committee will review recommendations regarding inclusion of these funds in the Target Date Funds when it considers the annual “glide path” review at its upcoming meeting on December 3, 2014.

Participants that wish to remain in the Mid Cap Value and Mid Cap Growth Funds have the option to purchase them through the self-directed brokerage option. The Plan will provide 60 days’ notice to participants so they can reallocate their assets in these funds before the transfer date should they choose to do so.

President Makras called for public comment. There were no comments from the public. Commissioner Paskin-Jordan recommended consideration of a SMID fund. Action: Moved by Commissioner Bridges, Seconded by commissioner Stansbury to Approve Recommendation to Consolidate Mid-Cap Funds

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Action: Moved by Commissioner Bridges, Seconded by Commissioner Stansbury to approve the recommendation to consolidate Mid-Cap Funds Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

11122014-11 Discussion Item SFDCP Manager Report

Documents provided to the Retirement Board prior to the current meeting: Staff Memorandum and Report

Caryn Bortnick, Deputy Director and Interim Deferred Compensation Manager, presented an oral and written report on this item. President Makras called for public comment. There were no comments from the public. Director Huish pointed out that 264 participants had enrolled in GoalMaker during the month of October, bringing total Goalmaker enrollments to 336. Action: This was a discussion only item

ADMINISTRATION CALENDAR 11122014-12 Action Item Review and Acceptance of the GASB 67/68 Report

as of June 30, 2014

Documents provided to the Board prior to the current meeting: Staff Memorandum and Cheiron report

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Janet Brazelton, Actuarial Services Coordinator, and Anne Harper, Cheiron (consulting actuary) presented an oral and written report on this item. Bill Hallmark from Cheiron participated by telephone. Ms. Brazelton reported that the Governmental Accounting Standards Board (GASB) issued Statement No. 67, Financial Reporting for Pension Plans—an amendment of GASB Statement No. 25 in June 2012. This new statement is effective for SFERS’ financial statements beginning with the fiscal year ending June 30, 2014.

GASB also issued Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 in June 2012. GASB Statement No. 68 first applies to employer financial statements beginning with the fiscal year ending June 30, 2015.

Key schedules from this GASB 67/68 Report will appear in both SFERS’ June 30, 2014 audited financial statements and in its June 30, 2014 annual report. The Report also includes information that the City and County of San Francisco may utilize for its FY 2014-15 reporting.

This Report is new and separate from the actuarial funding valuation report. Future funding valuation reports will no longer contain financial accounting disclosures required by GASB. President Makras called for public comment. There were no comments from the Public. Commissioner Cohen left the meeting at 2:25 PM and returned at 2:30 PM. Commissioner Driscoll inquired if the Controller had been briefed on this Report; Mr. Huish confirmed that he had. Commissioner Driscoll also inquired if the City’s bond rating agencies have been notified of the recommendation; Mr. Huish noted that this would normally be done by the Controller’s Office.

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Action: Moved by Commissioner Meiberger, Seconded by Commissioner Driscoll to Accept the GASB 67/68 Report as of June 30, 2014 , Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

11122014-13 Discussion Item Educational Presentation by the Office of the City Attorney on Gift Rules and Reporting Requirements

Documents provided to the Board prior to the current meeting: Presentation Materials

This item was continued.

11122014-14 Discussion Item Discussion of Board Communications Policy

Documents provided to the Board prior to the current meeting: Staff Memorandum and Board Communications Policy

This item was continued.

11122014-15 Discussion Item Review of Reporting Requirements Under San Francisco Campaign and Governmental Conduct Code

Documents provided to the Board prior to the current meeting: Copy of San Francisco Campaign and Governmental Conduct Code Section 3.1-410 and 3.1-109

Jay Huish, Executive Director, provided an oral and written report on this item. He noted that under the San Francisco Campaign and Governmental Conduct Code provisions applicable to SFERS, consultants are required to file a Statement of Economic Interests, also known as a Form 700. Action: This was a discussion only item

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Director Huish indicated that he was sending letters to the following SFERS consultants, requiring them to submit Form 700s: Angeles Investment Advisors, Cambridge Associates, TorreyCove, and Cheiron. President Makras called for public comment. There was no comment from the public. Commissioner Makras asked about the nature of the disclosure required from the consultants. Director Huish and Deputy City Attorney Katie Porter described the reporting and disclosure requirements. Action: This was a discussion item only.

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11122014-16 Discussion Item Travel Expense Report for the Quarter Ended September 30, 2014

Documents provided to the Board prior to the current meeting: Travel Expense Report for the Quarter Ended September 30, 2014

Jay Huish, Executive Director, presented an oral and written report on this item. He noted that travel expenses were behind pace for the fiscal year, but that he expected those to increase as additional investment staff were hired. President Makras called for public comment. There were no comments from the public. Action: This was a discussion only item.

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11122014-17 Discussion Item Executive Director’s Report Documents provided to the Retirement Board prior to the current meeting: Executive Director’s Report Jay Huish, Executive Director, presented an oral and written report on this item. Administrative Update:

Board meetings are now being recorded by SFGOVTV and will be available on demand at the SFGOVTV web site;

Update on SFERS’ move to 1145 market location;

The Board Retreat has been confirmed for February 6 and 7, 2015;

A Special Board meeting has been scheduled for December 3, 2014.

Attachments for Informational Purposes:

Educational Opportunities List Blackout Period List Forward Calendar

President Makras called for public comment. Mr. Van Lehn confirmed that there will be a special meeting of the Retirement Board on the 3rd and Regular meeting on the 10th. Commissioner Meiberger discussed recent articles relating to hedge funds. Commissioner Driscoll confirmed that Mr. Coaker has held conversations with Ms. Marguerite Young of SEIU regarding the issues that were raised in their letter, and that staff materials relating to hedge funds have been provided to Ms. Young. Mr. Huish noted that Ms. Young was identified as the point of contact for SEIU. Commissioner Meiberger recommended providing a written response to SEIU. This was a discussion only item

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CLOSED SESSION

Break: 3:00 – 3:15

11122014-18 Action Item Closed Session -- Recommendations and Possible

Action on Purchases of Particular, Specific Pension Fund Investments under California Government Code Section 54956.81

President Makras called for public comment. There were no comments from the public. The Retirement Board went into closed session at 3:15 PM. The Board met in closed session under California Government Code Section 54956.81 to consider three recommendations for the purchase of particular, specific pension fund investments. The following persons were present for closed session on the first recommendation: Commissioners Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury. William J. Coaker, Chief Investment Officer; Bob Shaw, Managing Director for Public Markets; Art Wang, Managing Director for Private Markets; Eunice McHugh, Senior Analyst for Fixed Income; Peter Lin, Securities Analyst; Anita Ng and Craig Beach, Cambridge Associates; Jay Huish, Executive Director; Caryn Bortnick, Deputy Director; Katie Porter, William Lin and Tran Ly, Deputy City Attorneys; and Norm Nickens, Board Secretary. The Board considered the second recommendation beginning at 3:45 PM. The same persons were present for the second recommendation, except the following left the closed session: Bob Shaw, Managing Director for Public Markets; Eunice McHugh, Senior Analyst for Fixed Income; and Anita Ng, Cambridge Associates. The Board considered the third recommendation beginning at 4:04 PM. The same persons were present for this recommend as for the second recommendation.

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The Board returned to open session at 4:15 PM. Action: Moved by Commissioner Meiberger, Seconded by Commissioner Cohen to not disclose discussions held in closed session. Ayes: Bridges, Cohen, Driscoll, Makras, Meiberger, Paskin-Jordan, Stansbury

11122014-19 Adjournment

Having no further business, the Board adjourned the meeting at 4:16 PM. Respectfully submitted, Jay Huish, Executive Director


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