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Vision Super

PRI reporting framework 2018

Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - INF 03]

Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]

Indirect – Manager Selection, Appointment and Monitoring

Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]

Direct - Listed Equity Active Ownership

Engagement [LEA 01 - 14] Overview [LEA 01 - 02] Process [LEA 03 - 10] Process for engagements run internally [LEA 03 - 04] Process for engagements conducted via collaborations [LEA 05 - 06] Process for engagements conducted with/on your behalf by service providers [LEA 07 - 08] General processes for all three groups of engagers [LEA 09 - 10] Outputs and outcomes [LEA 11 - 14] (Proxy) voting and shareholder resolutions [LEA 15 - 24] Overview [LEA 15] Process [LEA 16 - 20] Outputs and outcomes [LEA 21 - 24]

Assurance

Assurance [CM1 01.1 - 01.7]

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You are in Organisational Overview » Basic information

Basic information

OO 01. Signatory category and services

01.1. Select the type that best describes your organisation or the services you provide.

Non-corporate pension or superannuation or retirement or provident fund or plan

Corporate pension or superannuation or retirement or provident fund or plan

Insurance company

Foundation

Endowment

Development finance institution

Reserve - sovereign or government controlled fund

Family office

Other, specify

01.3. Additional information. [Optional]

Vision Super is a Public Offer Industry Super Fund focussed on Local Government.

The Fund has been in existence since 1947 and run only to benefit our members (approximately 100,000) not to make profit for shareholders.

OO 02. Headquarters and operational countries

02.1. Select the location of your organisation’s headquarters.

Australia

02.2. Indicate the number of countries in which you have offices (including your headquarters).

2-5

6-10

>10

02.3. Indicate the approximate number of staff in your organisation in full-time equivalents (FTE).

91 FTE

02.4. Additional information. [Optional]

Growth for the Fund over the last twelve months has been positive. The Board has put in place strategies to grow the Fund. These have started to pay-off with positive membership growth over the 2016-17 financial period. Vision Super also had positive growth in the areas of net contributions and roll ins.

OO 03. Subsidiaries that are separate PRI signatories

03.1. Indicate whether you have subsidiaries within your organisation that are also PRI signatories in their own right.

Yes

03.3. Additional information. [Optional]

OO 04. Reporting year and AUM

04.1. Indicate the year end date for your reporting year.

30/06/2017

04.2. Indicate your total AUM at the end of your reporting year, Exclude subsidiaries you have chosen not to report on and any advisory/execution only assets.

Total AUM
Total AUM	trillions	billions	millions	thousands	hundreds
Currency
Assets in USD
Assets in USD	trillions	billions	millions	thousands	hundreds

04.5. Additional information. [Optional]

The total AUM outlined in OO 04.2 is the total investment assets in the Pooled Superannuation Trust.

OO 06. How would you like to disclose your asset class mix

New selection options have been added to this indicator. Please review your prefilled responses carefully.

06.1. Select how you would like to disclose your asset class mix.

as percentage breakdown

	Internally managed (%)	Externally managed (%)
Listed equity	0 0	10-50% 48
Fixed income	0 0	10-50% 12.4
Private equity	0 0	<10% 4.2
Property	0 0	<10% 7.9
Infrastructure	0 0	10-50% 10
Commodities	0 0	0 0
Hedge funds	0 0	<10% 0.8
Forestry	0 0	0 0
Farmland	0 0	0 0
Inclusive finance	0 0	0 0
Cash	10-50% 11.2	0 0
Other (1), specify	0 0	<10% 0.1
Other (2), specify	0 0	<10% 5.4

'Other (1)' specified

          This relates to the Tail Risk Protection/Hedging Strategy for our Defined Benefit Plan (LASF)managed by PIMCO.

'Other (2)' specified

          This relates to our Absolute Returns Multi Asset Strategy which is comprised of managers Southpeak (Real Diversification Fund) and Invesco (Wholesale Global Targeted Returns Fund).

as broad ranges

06.2. Publish asset class mix as per attached image [Optional].

06.3. Provide contextual information on your AUM asset class split. [Optional]

Vision Super Asset Class Strategies

Australian equities

Sector objectives

Outperform the S&P/ASX 300 Accumulation Index by 1% p.a., after fees, over five years or more;
Keep the overall MER within Australian equities below 0.35% p.a.;
Outperform the market in down markets (average outperformance in months where the ASX 300 produces a negative return);
Minimise the number of managers to five or less unless there is a compelling return and/or risk proposition; and
Manage efficiently for after tax outcomes.

Performance benchmark

S&P/ASX 300 Accumulation Index.

Configuration

IFM Low Carbon Emission Mandate 53.0%

Perpetual Small Cap 7.5%

Kinetic Investment Partners Ltd - Small Cap 7.5%

Airlie Industrial Shares 17.0%

Wavestone Australian Equities 15.0%

Total 100%

International equities

Sector objectives

Outperform the MSCI All Countries World Index by 1% p.a., after fees, over five years or more;
Keep the overall MER within international equities below 0.40% p.a.; and
Minimise the number of managers to six or less unless there is a compelling return and/or risk proposition.

Performance benchmark

MSCI All Countries World ex Australia Net Dividends AUD

Configuration

SSGA Enhanced Indexed 50%

Harris Global Equities Benchmark Unaware Value 17.5%

Baillie Gifford Benchmark Unaware Growth 17.5%

Stewart Emerging Markets 8.0%

Sands Capital Emerging Markets 7.0%

Total 100%

Opportunistic Growth

Sector objectives - N/A

Performance benchmark

Private equity:

25% S&P ASX300 Accumulation + 5% p.a.

75% MSCI World ex Aust Net Div (Unhedged) + 5% pa.

Opportunistic Property

Mercer/IPD Australian Property Pooled Fund

Configuration - N/A

Absolute Return Multi Strategy (ARMS)

Sector objectives

Return at least 50%/50% bonds/equities index, over the long-term;
Mid-risk profile between equities and government bonds;
Diversification, particularly in equity down markets, and in rising interest rate environment;
Relatively high liquidity; and
Not overly expensive (sector MER below 0.8% p.a.).

Performance benchmark

Bloomberg AusBond Bank Bill Index + 4.5% p.a.

Configuration

SouthPeak Real Diversification Fund 50%

Invesco Global Targeted Return Fund 50%

Total 100%

Alternative Growth

Sector objectives

Return in excess of equities index, over the long-term;
Risk profile lower than equities;
Diversification, particularly in equity down markets, and also in rising interest rate environments; and
Relatively high liquidity.

Performance benchmark

Bloomberg AusBond Bank Bill + 5% pa.

Configuration

Bridgewater Pure Alpha Fund 100%

Infrastructure

Sector objectives

A return premium of at least 1.5% p.a. above a 50%/50% index of Bloomberg AusBond Government Bond 10 Years+ and ASX 300 Accumulation Index;
Mid-risk profile between equities and government bonds;
Diversification, through allocation to different risk exposures (e.g. regulatory);
Positive correlation to inflation to provide some inflation hedging; and
Moderate cost - sector MER below 0.60% p.a.

Performance benchmark

50% Bloomberg AusBond Government 10yr+Index + 3% pa

50% S&P/ASX 300 Accumulation Index + 3% pa.

Configuration

Regional Infrastructure Fund RIF 2%

IFM Australian Infrastructure 40%

IFM International Infrastructure 40%

Hastings Utilities Trust of Australia 18%

Total 100%

Property

Sector objectives

To broadly match the return of its benchmark (Mercer/IPD Australian Pooled Property Fund Index) net of fees over ten years;
To target high quality core property portfolios with defensive characteristics;
Diversification, through an allocation to different property sectors (e.g. retail and office) and geographies; and
Moderate cost – sector MER below 0.60% p.a.

Performance benchmark

Listed Property - International

FTSE/EPRA NAREIT Developed Rental Index Hedged in AUD (Net of Fees)

Unlisted Property

Mercer/IPD Australian Property Pooled Funds (Net of Fees)

Configuration

AMP P Units 32.0%

Eureka Core Property Fund 3 1.0%

ISPT 32.0%

QIC Shopping Centre Fund 10.0%

Resolution Capital GLOBAL REIT 25.0%

Total 100%

Indexed Property

Sector objectives - None set as this mainly relates to a specific allocation to the Funds Systainable Balanced Investment Option

Performance benchmark

S&P/ASX 200 Australian Real Estate Investment Trust Index

Configuration

SSGA Passive AREIT 100%

Diversified bonds

Sector objectives

Low risk, which exhibits defensive characteristics and provides downside protection (a portfolio of longer duration investment grade government bonds and credit);
Performance consistent with the custom benchmark for the sector (50% Bloomberg AusBond Composite All Maturities Bond Index and 50% Barclays Global Aggregate ex-Australia Index (Hedged in AUD));
High liquidity; and
Low cost – sector MER below 0.20% p.a.

Performance benchmark

50% Bloomberg AusBond Composite 0 + year Index

50% Barclays Glob Aggregate Composite.

Configuration

Amundi Aust Fixed Interest 50%

Brandywine Global Opp Fixed Income 15%

Amundi Int’l Fixed Interest 35%

Total 100%

Alternative Debt

Sector objectives

A stable yield premium to government bonds and cash, with performance of around 3% p.a. above the Bloomberg AusBond Bank Bill Index net of fees over three years;
A mid-risk profile between equities and government bonds;
Diversification through exposure to different debt markets (e.g. bank loans, emerging markets debt, asset backed securities, etc.);
Low duration strategies to limit direct exposure to rises in interest rates; and
Moderate cost - sector MER below 0.40% p.a.

Performance benchmark

Bloomberg AusBond Bank Bill Index + 3% p.a.

Configuration

IFM Specialised Credit 50%

Barings Global Loan and High Yield Bond Fund 50%

Total 100%

Cash

Sector objectives

To outperform the consumer price index (CPI) over rolling three year periods.
The portfolio is expected to achieve positive returns over all periods.
To provide liquidity for daily cash flow requirements for the Cash options.
If the Cash Investment Portfolio is used for all Investment options with a Cash allocation, then it must also provide liquidity for daily cash flow requirements and the asset allocation rebalancing of all Investment options.

Performance benchmark

Bloomberg AusBond Bank Bill Index

Configuration

The Internal Cash Portfolio Investment Policy sets out

Eligible Investments
Security exposure limits
Counterparty / Issuer limits
Credit Rating exposure limits

Tail Risk Protection Hedging

Sector objectives - N/A

Performance benchmark

No asset class benchmark

Manager benchmark:

Portfolio Investment Risks: 0.63
Reference Investment Portfolio Equity Beta: 0.63
Attachment Point: 15%
Investment Hedge Horizon: 12 months
Target Expense (Costs) Level (basis points): 50 to 70 basis points

Configuration

PIMCO Tail Risk Protection: 100%

Currency Overlay

Sector objectives

Effectively documented in Foreign Currency Management Policy

Performance benchmark - N/A

For currency overlay portfolios:

Hedge ratio x (MSCI World Ex Aust AUD Hedged – MSCI World Ex Aust AUD Unhedged)

Millennium Global 100%

OO 07. Fixed income AUM breakdown

07.1. Provide to the nearest 5% the percentage breakdown of your Fixed Income AUM at the end of your reporting year, using the following categories.

Externally managed

60 SSA

5 Corporate (financial)

30 Corporate (non-financial)

5 Securitised

Total 100%

OO 08. Segregated mandates or pooled funds

New selection options have been added to this indicator. Please review your prefilled responses carefully.

Provide a breakdown of your organisation’s externally managed assets between segregated mandates and pooled funds.

Asset class breakdown	Segregated mandate(s)	Pooled fund(s)	Total of the asset class (each row adds up to 100%)
[a] Listed equity	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[b] Fixed income - SSA	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[c] Fixed income – Corporate (financial)	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[d] Fixed income – Corporate (non-financial)	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[e] Fixed income – Securitised	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[f] Private equity	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[g] Property	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[h] Infrastructure	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[j] Hedge funds	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[o] Other (1), specify	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%
[p] Other (2), specify	0% <10% 10-50% >50 %	0% <10% 10-50% >50 %	100%

08.2. Additional information. [Optional]

Vision Super's private equity portfolio allocations with the exception of a few investments are predominantly allocated via a Fund of Fund Model approach with underlying funds/partnerships. Our ownership levels are very small compared to overall Fund levels.

Diversified Bonds (Fixed Income) is composed of a sub-sector asset class named "Alternative Debt" consisting of two Pooled Fund arrangements through the Barings Global Loan and High Yield Bond Fund and the IFM Specialised Credit Fund (Floating).

The Absolute Returns Multi-Strategy asset class is allocated via trusts/pooled funds through Invesco and SouthPeak Investment Management.

The Hedge Fund allocation (we name as Alternative Growth asset class) via Bridgewater Associates is invested within the Pure Alpha Fund.

Other 1: Tail Risk Hedge Protection Program

Other 2: Absolute Returns Multi-Strategy

OO 09. Breakdown of AUM by market

09.1. Indicate the breakdown of your organisation’s AUM by market.

Developed Markets	0% <10% 10-50% >50 %
Emerging, Frontier and Other Markets	0% <10% 10-50% >50 %
Total100%

09.2. Additional information. [Optional]

Emerging markets refers to portfolio allocations from asset class sectors within our international equities and diversified bonds portfolios. For diversified bonds there is a sole active manager who can allocate to emerging market debt where emerging markets are defined as Non-World Government Bond Indices (WGBI) markets with local currency long-term rating below A- (or the equivalent). These are generally assigned by all Nationally Recognized Statistical Rating Organizations (Standard & Poor's Ratings Services, Moody's Investors Services and Fitch, Inc.) that provide such a rating.

The debt universe encompasses a large number of sub-strategies with a broad range of risk/return profiles. In essence, the manner and extent to which ESG incorporated into the investment process will differ across managers and strategies (e.g developed market government bonds versus emerging market debt).

Observations overall are that the integration of ESG into the investment process is less developed within the debt universe compared to equities. Whilst the vast majority of debt managers are cognisent of ESG, the level of integration and relevance to debt products is mixed. Both our asset consultant and management placed more emphasis on drawing attention to ESG and emphasing its importance at both the firm and investment level with relevant managers.

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