2018 ANNUAL REPORT

READ THE REPORT ONLINE AT www.ppi.institute/2018-annual-report April 29, 2019

Dear PPI Members and Friends:

Throughout 2018, PPI members grappled with an ever-shifting financial climate and geopolitical uncertainty. And yet, your goals and vision, as well as our own, remained steady. Your beneficiaries, stakeholders, and clients expected the highest levels of financial stewardship, even as increased trade tensions and political turmoil clouded the investment landscape. PPI again served as a critical convener; helping you to gain high-level insights, powerful perspectives, and to cut through the noise. And we renewed our commitment to PPI’s Asia Pacific focus.

Last year, we achieved another successful year of PPI operations. In 2018, we further strengthened our capacity to present world-class programs on the power and potential of global investing. The cornerstone of PPI is the rich community fostered by our organization. We further enhanced this community through a thoughtful expansion of membership and increased connectivity between gatherings. A sharpened focus on roundtable and Executive Seminar offerings continued to burnish PPI’s standing, and our membership benefited from a strong connection to the organization and to each other.

We continue to ensure that PPI’s processes and internal capabilities are linked to our organizational goals. We have progressed steadily toward an integrated organization from top to bottom. One characterized by strategic thinking, transparent governance, and efficient execution.

PPI’s membership is approaching capacity, and a full complement of members in 2019 will be accompanied by relative parity between asset owners and asset managers. These milestones have been met by implementing and executing the smart growth strategy envisioned by management and the board of directors. Membership capacity will be maintained by expanding the breadth of contacts within member organizations. Proactive outreach, internal review, and vigilant documentation will provide greater institutional memory and organization- wide coordination.

2 New programs and engagement opportunities have deepened our relationships with PPI members and have improved how we measure the impact of our programs. We will continue utilizing this data in order to refine both content and delivery, thereby elevating PPI programs to a new level of excellence.

In 2018, we held our Winter Roundtable in Washington, D.C., where we discussed the politics and policies impacting the global financial horizon. In the summer, we returned to our West Coast roots to discuss the economic and geopolitical developments at mid-year and to celebrate our 25th Anniversary. We rounded out 2018 by traveling to the "Land Down Under" for our Executive Seminar and Asia Pacific Roundtable, where we examined how regional powers such as Australia are navigating a changing global order.

PPI ended 2018 on a strong financial footing. We will continue pursuing our successful funding model in 2019 and into the future. In addition, we look to partner with foundations and other sources of institutional funding, but only on the condition that they do not compromise the character or integrity of our programs, operations, and brand.

And while we looked to the future, we also took time in 2018 to commemorate PPI’s history and traditions during the Summer Roundtable. It was a thrill to have so many of our founders with us to mark this momentous occasion. It offered a concrete demonstration of the staying power and value of this community.

Lastly, I would like to take this opportunity to thank PPI's dedicated management team, who work tirelessly to plan and to execute our mission and programs. We look forward to seeing all of you at the Summer Roundtable in Chicago, and at the Executive Seminar and Asia Pacific Roundtable in Shanghai this fall.

Sincerely yours,

Lionel C. Johnson President

3 High-Impact Programs, Long-Term Reach

Our 2018 programs continued to address the ramifications and undercurrents of global shifts and disruptions. As investors grappled with policy unpredictability amid a continuing realignment of the international system marked by rising economic nationalism, it was imperative that their views of the future be informed by the transformations that demographics and other long-term trends had brought about in the world economy. The Pacific Rim is, of course, not immune to these and other developments: PPI's programs in Australia explored the near-term challenges facing this country’s economy, as well as Asia-Pacific perspectives in managing the headwinds to globalization.

4 THE GLOBAL POLICY OUTLOOK AMID A RETURN OF ECONOMIC NATIONALISM

2018 Winter Roundtable in Washington, D.C. March 14-16, 2018

There has been a resurgence of nationalist economic policies in many countries around the world, both developed and emerging. However, their governments have offered starkly different levels of policy clarity and consistency on areas ranging from trade and foreign relations to taxation and immigration. Some traditional champions of globalization have turned inward, as they struggle domestically with political fragmentation, gridlock and shifting priorities, exacerbated by rising inequality. Will policy unpredictability be the new normal, or will there be progress on some fronts? How will multilateral institutions evolve, and will new models of global governance arise? How should institutional investors factor these trends into their long-term decision-making?

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5 5 DRIVERS OF CHANGE: FUTURE-PROOFING INVESTMENT PORTFOLIOS

2018 Summer Roundtable in La Jolla, CA July 11-13, 2018

While political uncertainty and market volatility continue to cloud today’s investment environment, long- term institutional investors must prepare for and focus on the powerful underlying forces of growth in the coming decades. Demographic trends, technology breakthroughs, and new approaches to meeting basic human needs are profoundly affecting economic and business activities, industries and sectors, and policies and regulations. Within the Asia-Pacific region, shifts in the economic and geopolitical landscape will continue to shape regional growth opportunities, leadership, collaboration, and competition. What actionable insights can long-term investors glean for their institutional portfolios? How can they overcome the short-term impediments to long-term capital allocation?

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6 6 AUSTRALIA: BUILDING A DIVERSE ECONOMY FOR SUSTAINABLE GROWTH

2018 Executive Seminar in Melbourne, Australia October 14-16, 2018

In Partnership with the State Government of Victoria

Australia’s cycle-defying economy is at a significant juncture. On one hand, its transition to a more services-oriented and diverse economy, coupled with smart immigration policies, will bode well for future growth; on the other, stagnant wage increases, soft consumer spending, an unstable housing market, and challenges in the energy and mining sectors are reasons for concern. Externally, Australia’s relations with its largest trading partner, China, has also entered new territory, which may necessitate some changes to Australia’s strategies in the Asia-Pacific region. The Executive Seminar is designed to provide 15-20 of PPI’s institutional asset owner members a deep dive into these and other aspects of the Australian economy as well as the evolving external environment in which it operates.

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View the gallery 7 7 THE ASIA-PACIFIC’S OPPORTUNITY IN AN EVOLVING INTERNATIONAL ORDER

2018 Asia Pacific Roundtable in Sydney, Australia October 17-19, 2018

With its unique geographical location in the Asia- Pacific region, Australia has provided an interesting vantage point for discussions toward rethinking the changes and opportunities in the region as a result of a shifting global order. As the United States realigns its international priorities and China expands its overseas investments and influence, how will Southeast Asian countries, Japan, India, and others reposition their growth strategies? Will the Trans- Pacific Partnership grow and evolve? What other partnerships are being considered and negotiated? How will these trends and undercurrents affect asset prices in the mid- to long-run?

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8 8 INFRASTRUCTURE POLICIES, PRIORITIES, AND OPPORTUNITIES

2019 Infrastructure Seminar in Washington, D.C. March 13, 2018

The U.S. economy, like any other, is built on the back of the country’s infrastructure network. However, the systems currently in place are showing their age and have, in some areas, become bottlenecks of economic growth. Civil engineering groups have also repeatedly raised safety concerns. As the White House and Congress continue to wrestle on budget negotiations, federal spending on infrastructure has become a national debate. Does the key to modernizing infrastructure rest at the federal, or state and local level? What can be learned from successful programs in other countries? How should infrastructure investors think about opportunities in global markets? How are investors reacting to shifting opportunity sets?

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9 9 Trusted Dynamic Global Community

PPI’s membership grew at a healthy pace in 2018, and we have largely achieved parity between asset owner and manager member institutions. Interest in PPI membership has been robust, and we have earned the right to be judicious as well as strategic in terms of membership recruitment.

PPI welcomed 19 new and returning member institutions in 2018, and by year-end our membership roster comprised 120 member organizations. The new member organizations in 2018 were: APG; Asset Metrix; ATP; Bill & Melinda Gates Investments; Capital Group; Creaegis; Equilibrium Capital Group; FM Global; Future Fund; Government Pension Investment Fund - GPIF; Guggenheim Partners; Joy Capital; KKR; Los Angeles City Employees’ Retirement System; Partners' Group; PSP Investments; SURA Asset Management; Teacher Retirement System of Texas; and West Virginia Investment Management Board. PPI gained three new Friend of PPI members: Russell Hiscock; Shigeki Kimura; and Amb. Paul W. Speltz. Last, but not least, Lifetime Membership was awarded to John Campbell OBE.

We celebrated PPI’s 25th Anniversary throughout 2018, the pinnacle of which was the gala celebration during the Summer Roundtable in La Jolla, CA (click the Summer Roundtable image above to view the photos). Additionally, we marked this milestone with a new PPI video.

Watch PPI at 25 and Beyond:

10 Our Membership Rosters on December 31, 2018 Asset Owners and Allocators

Abu Dhabi Investment Authority Los Angeles City Employees’ Retirement System Alaska Permanent Fund Los Angeles County Employees Retirement Alberta Investment Management Corporation Association Alberta Teachers’ Retirement Fund Margaret A. Cargill Philanthropies APG Minnesota State Board of Investment ATP Municipal Employees’ Retirement System of Michigan AustralianSuper National Council for Social Security Fund, P.R. China BCI National Pension and Provident Fund, Bhutan Bill & Melinda Gates Investments National Railroad Retirement Investment Trust British Airways Pension Investment Management Ltd. New York State Common Retirement Fund British Columbia Pension Corporation New Zealand Super Fund California Public Employees’ Retirement System NewYork-Presbyterian Hospitals Investment Office California State Teachers’ Retirement System NIIF Limited Canada Pension Plan Investment Board Ontario Teachers’ Pension Plan Board Carnegie Corporation of New York Oregon State Treasury Lifetime Members Cbus PGGM Citizen Investment Trust, Nepal PKA Ronald E. Bornstein CN Investment Division Premji Invest John Campbell OBE Creaegis Public Employee Retirement System of Idaho Margaret Carpenter Development Bank of Japan QIC Roy Doumani Employees Provident Fund, Nepal San Francisco Employees’ Retirement System Ambassador Chas W. Freeman Jr. First Swedish National Pension Fund – AP1 South Dakota Investment Council Ta-lin Hsu FM Global State of Wisconsin Investment Board H. Lawrence Hull, Jr. Fremont Group Teacher Retirement System of Texas Takeshi Kadota Future Fund The City of New York Office of the Comptroller Doug Pearce GIC Private Limited The Norinchukin Bank Shelley I. Smith Government Pension Fund, Thailand Third Swedish National Pension Fund – AP3 Ambassador Linda Tsao Yang Government Pension Investment Fund, Japan TIFF Investment Management Hong Kong Monetary Authority University of Southern California Endowment Investment Management Corporation of Ontario Washington State Investment Board Kaiser Permanente West Virginia Investment Management Board

Asset Managers and Advisors

Actis Hermes Investment Management Affinity Equity Partners IFC Asset Management Company Afina International Institutional Real Estate, Inc. AllianceBernstein Invesco Angelo, Gordon & Co. Jasper Ridge Partners Apollo Global Management Joy Capital Ascendent Capital Partners KKR Asia Asia Alternatives Management Meridiam Baring Private Equity Partners India Mitsubishi Corporation Barings Morgan Stanley BlackRock Mountain Pacific Group Friends of PPI Bridgewater Associates Nikko Asset Management Oliver Bolitho Brookfield Asset Management Nuveen Susan J. Carter Campbell Lutyens & Co. Olympus Capital Asia Howard Chao Capital Group Ortec Finance Sandra Haas Cartica Management Partners Group Geoffrey A. Hirt CDH Investments Perella Weinberg Partners Russell Hiscock China International Capital Corporation, US Quantum Advisors/Primary Real Estate Advisors Howard L. Hull III Corston-Smith Asset Management Siguler Guff & Company Takajiro Ishikawa Eastspring Investments, Inc. Silicon Valley Bank JETRO, New York Equilibrium Capital Group Sit Investment Associates, Inc. Shigeki Kimura Fidelity Institutional Asset Management Sumitomo Mitsui Trust Asset Management Wayne Kozun FountainVest Partners (Asia) SURA Asset Management Arthur Mitchell GIP India Sustainalytics Ambassador Clark T. Randt Goldman Sachs Asset The TCW Group Kazuo Seki Management Tokio Marine Asset Management Co. Ambassador Paul W. Speltz Grove Street Advisors Unison Capital Peter H. Sullivan Guggenheim Partners Wellington Management Company Bryan Thomson Hamilton Lane Advisors William Blair James Timmins HarbourVest Partners Yuelin T. Yang Strong Revenues and Resources

PPI demonstrated sound fiscal management and accountability measures, as demonstrated by the audited financial statements completed as of December 31, 2018 by SingerLewak, LLP. The following Statement of Activities reflects total Revenue and Support of $2,803,152, an increase of $183,493 or 7% from the prior year. Total Expenses were $2,741,9973, an increase of $94,044 or 4% from the prior year. The total change in 2018 net assets is $61,176.

Our goal is to undergird PPI’s financial future through strong and diversified revenue flows and effective expense management. In 2018, membership dues, roundtable registration, and contributions by PPI members were our lead sources of revenue. We gratefully acknowledge our 2018 Sponsorship Program supporters: Barings, FountainVest Partners (Asia), Goldman Sachs Asset Management, Hermes Investment Management, Meridiam, Nikko Asset Management, and Siguler Guff & Company.

PPI’s solid financial position in 2018 enabled us to make investments in programs, people and member service technology, while also shoring up PPI reserves to weather unforeseen revenue shortfalls.

12 Statement of Activities

For the Year Ended December 31, 2018 With Comparative Totals (USD) for the Year Ended December 31, 2017 2018 Revenue Sources <1%

2018 2018 2% 4%

REVENUE 13%

Membership Dues 2,257,200 2,206,300

Roundtable Registration 350,718 287,360

Executive Seminar Registration 67,885 72,250

Investment Income 22,349 8,894 81%

Total Revenue 2,698,152 2,574,804

SUPPORT

Contributions 105,000 140,240

Total Support 105,000 140,240

TOTAL REVENUE & SUPPORT 2,803,152 2,715,044

EXPENSES 2018 Expense Allocation Program Services 2,158,461 2,170,047

Support Services 583,515 477,885 21%

Total Expenses 2,741,976 2,647,932

CHANGE IN NET ASSETS 61,176 67,112

Net assets without donor restrictions, 2,040,077 1,972,965 beginning of year 79% Net assets without donor restrictions, 2,101,253 2,040,077 beginning of year

The financial information presented is from the audited financial statements. Interested parties can obtain a complete copy of the audited financial statements by contacting our office. 13 13 PPI's Powerful Perspective

PPI’s leaders—our global board of directors, Advisory Council, and management team based in San Francisco—are dedicated to fostering a trusted dynamic PPI Community with a powerful perspective. We must continuously earn this status by providing a safe and open space for our members to gather to discuss and debate the most relevant and pressing issues for institutional investors. We recognize that the PPI membership represents a powerful force in the global economy, and we understand that it is our duty to support the work of our members as they diligently assess investment opportunities and risks every day.

14 Our Leadership Rosters on December 31, 2018 ADVISORY COUNCIL

Doug Pearce, Chair BOARD OF DIRECTORS Teresa C. Barger OFFICERS Christopher K. B. Brotchie Jeb Burns, Chair Henry Jones, Secretary Chief Investment Officer President Roy Doumani Municipal Employees’ Retirement System of CalPERS Board of Administration Michigan Larry Hull

John Skjervem, Vice Chair Bryan Thomson, Treasurer Takeshi Kadota Chief Investment Officer Former Senior Vice President,Public Equities, Oregon State Treasury bcIMC Herb Meiberger

James R. Timmins

Ambassador Linda Tsao Yang Howard Chao Ambassador Paul W. Speltz Principal Chairman and CEO Doon Capital Global Strategic Associates

Ajit Dayal Frank K. Tang Founder - Member Portfolio Team CEO & Managing Partner MANAGEMENT Quantum Advisory Private Limited FountainVest Partners PRESIDENT Takajiro Ishikawa Leslie Teo Lionel C. Johnson Senior Executive Vice President, Mitsubishi Chief Economist/Director, Heavy Industries America Inc., & Senior Economics & Investment Strategy Vice President, Mitsubishi Corporation GIC Private Limited VICE PRESIDENT & CHIEF OPERATING OFFICER Wayne Kozun Theresa J. Whitmarsh James F. Apostol Chief Investment Officer Executive Director Forthlane Partners Washington State Investment Board EXECUTIVE ASSISTANT Gwen Bough Melissa J. Ma Conrad Yan Co-Founder and Managing Partner Partner Asia Alternatives Management Campbell Lutyens & Co., Ltd. FINANCE & ADMINISTRATION DIRECTOR Robert Maynard ______Sabina Ong Gotuaco Chief Investment Officer Public Employee Retirement System of SENIOR PROGRAM DIRECTOR Idaho Larry Hull, Founder & Chair Emeritus Piin-Fen Kok Sheila Patel CEO, International PROGRAM DIRECTOR Goldman Sachs Asset Management Shu Li

PROGRAM MANAGER Evie Fong

TECHNOLOGY & DESIGN DIRECTOR Mark Conrad Mancao 15 15 ACKNOWLEDGEMENTS

We are especially grateful for the service of two members whose terms on the PPI Board of Directors ended in 2018: Else Bos and Susan Carter, who both served a full four-year term. We were also fortunate to have worked with PPI Asia Pacific Fellow, Robert Tang, who worked with the team on the 2018 Summer Roundtable and Australia programs; and summer intern, Ari Boosalis, who worked on PPI’s relationship management database. We are also enormously grateful to the consultants and contractors with whom we worked in 2018, for their many contributions to PPI’s programs and institutional development: Attorneys Gary Bethel and Nancy Ober, Littler Mendelson; Attorney Robert Burlingame, Amplitude IP; Attorney Lorianne Cercenia, Pearl Law Group; Jon Coy and Taylor Madden, videographers, Artic Leaf; Russell Edwards, photographer; Joel Horsager, producer, and the team at Sound Advice; Jonathan Kaufman, co- founder and principal, Third Plateau; Gabriel Ross, senior counsel, Global Policy Initiatives; Dr. Martha Summerville, president, Summerville Consulting; Liz Williams, event planner; and Bruce Wright and Grant Lautz, (CPAs), SingerLewak.

Once again, we thank you, our loyal members and friends, for your steadfast support of PPI and our important mission, throughout 2018!

16 16 PACIFIC PENSION & INVESTMENT INSTITUTE

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