1. Inclusion of infrastructure in MySuper
June 2017
This material is not for circulation to retail investors.

2. Important information
This information is provided by NULIS Nominees (Australia) Limited (ABN , AFSL ) as trustee of the MLC Super Fund (ABN (“MLC” or “we”), a member of the National Australia Bank Limited (ABN , AFSL ) (“NAB”) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney An investment in any product offered by a member company of the National Australia Bank group of companies does not represent a deposit with or a liability of the National Australia Bank Limited (ABN ) or its subsidiaries. This presentation has been prepared for licensed financial advisers only. This document must not be distributed to “retail clients” (as defined in the Corporations Act 2001 (Cth)) or any other persons. This information may constitute general advice. It has been prepared without taking account of an investor’s objectives, financial situation or needs and because of that an investor should, before acting on the advice, consider the appropriateness of the advice having regard to their personal objectives, financial situation and needs. Investors should obtain a Product Disclosure Statement or other disclosure document relating to any financial product which is issued by MLC, and consider it before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available upon request for MLC products by phoning the MLC call centre on or on our website at mlc.com.au, and for Plum products by clicking or calling MySuper is an investment option within the MLC Super Fund. The MLC Super Fund was established on 30 June The assets and members of The Universal Super Scheme, the Plum Superannuation Fund, the Worsley Alumina Superannuation Fund, National Australia Bank Group Superannuation Fund A and the BHP Billiton Superannuation Fund were transferred into the MLC Super Fund on a successor fund basis on 1 July Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. Any projection or other forward looking statement (‘Projection’) in this document is provided for information purposes only. No representation is made as to the accuracy or reasonableness of any such Projection or that it will be met. Actual events may vary materially. MLC relies on third parties to provide certain information and are not responsible for its accuracy. MLC is not liable for any loss arising from any person relying on information provided by third parties. While MLC has taken all reasonable care in producing this communication, subsequent changes in circumstances may occur and impact on its accuracy. The investment managers are current as at the date this communication was prepared. Investment managers are regularly reviewed and may be appointed or removed at any time without prior notice to you. Returns are not guaranteed and actual returns may vary from any target returns described in this communication. The performance returns in this communication are reported after deducting administration fees, costs and taxes unless otherwise stated. Any opinions expressed in this communication constitute our judgement at the time of issue and are subject to change. We believe that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made at the time of compilation. However, no warranty is made as to their accuracy or reliability (which may change without notice) or other information contained in this communication.

3. What’s changed?
We’ve introduced an allocation to infrastructure in MySuper.
The allocation is a mix of listed and unlisted.
It’s been funded from fixed income allocations.
We’re targeting to invest up to 2% in infrastructure, however the actual asset allocation is currently 0.25% (as at 30 April 2017).
The benefit of including infrastructure is that it provides a stable, predictable yield and is diversifying to other asset classes.
There’s no impact to overall fees from this change.

4. Why hasn’t MySuper invested in infrastructure previously?
MySuper was established in At that time we did not anticipate how low interest rates would go or how strong the rally in these assets would be.
The bullish valuation cycle means many of these assets have been expensively priced, which has justified a cautious and selective approach to investing in this area.
In addition, as a new investment option in 2013:
we prioritised directing initial funds inflows to more liquid assets, and
we needed to maintain fund liquidity to help facilitate the orderly transfer of member accounts (Accrued Default Amounts) into MySuper (as required by the Stronger Super regulations). Unlisted assets are typically illiquid, valued relatively infrequently and have a long implementation lead-time.
For MySuper’s initial allocation to unlisted assets we preferred investing in global private assets, which has performed exceptionally well.

5. Why are we investing in infrastructure now?
MySuper now has significant FUM (approx $20bn) and inflows are positive.
The transition of members from other default funds is complete.
MySuper is in a good position to use its scale and stronger liquidity position to selectively invest in high quality, well priced infrastructure opportunities when they arise.
We will be moving in a very measured and selective way and seek to take advantage of any distress in the market to acquire assets at attractive levels.

6. How will MySuper access infrastructure?
JANA has been researching and advising clients on infrastructure investments since the mid-1990s, when it was considered a new asset class. 
In infrastructure, valuation and a disciplined approach to entry are critical. We’ve carefully selected investments in quality infrastructure asset funds and co-investments through three high quality managers.
While most of this exposure is unlisted, we have an allocation to a global listed infrastructure fund (via Redpoint). Listed investments can be quickly implemented and provide cost efficiencies, liquidity and further diversification.
The allocation to infrastructure provides the overall portfolio with diversification across global regions and subsectors. The global infrastructure allocation is hedged to the Australian dollar.
Actual asset allocations as at 30 April 2017.
Source: JANA Corporate Investment Services Limited.

7. How may clients benefit?
Benefits of investing in infrastructure can include:
stable, predictable yield and scope for moderate capital growth
low correlation with other traditional asset classes, such as shares and bonds, which increases diversification in a portfolio
inflation protection
franking credits for domestic assets, and
a long-term investment timeframe, which is ideal for long-term investors.

8. What is infrastructure?
Infrastructure are assets which:
provide essential services to the community
display monopolistic characteristics with high barriers to entry
are capital intensive and typified by stable income flows over a long-time frame
are commonly geared
are typically long-term projects, and
can either be listed or unlisted.

9. Types of infrastructure assets
Infrastructure assets can be broken down into two broad subsets – economic and social. Generally, we consider economic assets to be riskier than social infrastructure assets. Typical examples of economic and social infrastructure assets include:
Economic
Toll roads
Airports
Utilities
Communication assets
Renewable energy
Social
Roads (availability)
Education facilities (schools, universities)
Health facilities (hospitals)
Security (prisons, military)

10. Listed vs unlisted infrastructure
We’re invested in listed and unlisted infrastructure.
Unlisted infrastructure
Listed infrastructure
Benefits:
Greater control over the decision-making process
Access to more detailed information
Ability to take longer-term investment decisions
Control of capital expenditure and borrowing
Liquidity
Greater diversification
Disadvantages:
Illiquidity
Potentially less diversification
Similar to property, the very different assets make benchmark selection difficult
Access only to publicly available information
Limited control over company strategy
Correlation with global shares

11. Key risks of investing in infrastructure
Comments
Regulatory/political risk
Changes in government and the political environment can heighten the regulatory risk associated with the asset.
General economic factors
(eg low GDP)
Volumes at airports, roads, seaports and other economic infrastructure assets are often correlated to general economic conditions.
Interest rate, gearing and refinancing risk
High nominal interest rates can raise the average cost of funding, impacting overall returns. Changes in debt market conditions can also impact the level of refinancing.
Project-specific risks
These may include construction risk, contract or counterparty risk.
Illiquidity risk
Unlisted infrastructure assets are generally considered illiquid, so they tend to suit longer-term investors (10 years+). Internal portfolio management can mitigate this risk.
Risk of impaired exit value at exit
This risk is more associated with closed-end funds which have a finite life.
Specific unlisted infrastructure risks
These include valuation risk.

12. Who are the managers? QIC Global Infrastructure Fund
Core unlisted infrastructure; active-core investment strategy
About QIC
QIC is a Queensland government owned corporation created in QIC Global Infrastructure was established in Manager FUM is approx. $79b (Dec 2016) across a range of asset classes.
The QIC infrastructure team has deployed approx. $7b (June 2016) of capital into 23 global infrastructure assets.
Investment approach
QIC has as active-core investment strategy. The strategy targets operationally mature infrastructure investments benefiting from active management, stakeholder engagement and/or expansion opportunities.
QIC’s investment approach is sector driven, with deep industry knowledge. The fund focuses mainly on the energy, transport and Public-Private Partnership (PPP)/social infrastructure sectors. The team develops a yearly investment plan which overlays QIC’s macro-economic views, the portfolio targets and restrictions, and the available investment pipeline to identify key investment opportunities on a one- and three-year basis.
Geographic focus: OECD, 60% Australian/ 40% offshore (UK/Europe/North America).
Portfolio construction restrictions
Max non-Australian assets: 60% (hedged)
Single asset max: 20%
Sub debt max: 20%
Greenfield max: 10%
Holdings
As at March 2017, the portfolio held three assets:
Lochard Energy (renamed from Iona Gas Storage)
Powering Australia Renewables Fund (PARF)
Port of Melbourne

13. Who are the managers? AMP Capital Community Infrastructure Fund
Social infrastructure, active asset management
About AMP
AMP Capital is a majority owned subsidiary of AMP Limited and began investing in direct infrastructure in the late 1980s. It’s infrastructure investment team’s capabilities span research, origination and due diligence, transaction execution, asset management and portfolio construction and management. In direct infrastructure, the team manages A$11.5bn (December 2016) in assets under management.
Investment objective
The fund aims to provide total returns (primarily income) of 10% pa before costs and taxes over the long term.
Investment approach
The fund invests in an unlisted portfolio of high quality PPP-style social infrastructure assets in Australia and New Zealand. The fund will seek to hedge any New Zealand dollar exposure back to Australian dollars.
The fund focuses on assets within education, health, justice, defence, community housing, recreational facilities, transport and other social infrastructure sectors where income from the assets is sourced primarily from governments, government-backed entities or similar high credit quality counterparties under long-term concession contracts.
The fund maintains a conservative risk profile and primarily aims to invest in established, operational infrastructure assets, acquired in the secondary market, where the size of the fund’s holding in assets is sufficient to allow the fund’s investment team to exert significant influence upon ongoing asset operation.
The fund’s investment approach encompasses three key elements:
deal sourcing
portfolio diversification, and
active asset management.
The fund maintains a borrowing facility which is used to fund asset acquisitions. It intends to limit any such borrowings to a maximum of 20% of the fund’s gross value.
Holdings (at December 2016)
Royal North Shore Hospital • Victorian Desalination Plant • AquaTower
Eastern Goldfields Regional Prison • SA Schools • NSW Schools II
Southbank Institute • Victorian Schools • Riverland Water
South East Queensland Schools • Darwin Convention Centre • NZ Hospital Car Parks

14. Who are the managers? Redpoint Global Listed Infrastructure
Global listed infrastructure, enhanced index investment management
About Redpoint
Redpoint Investment Management is a boutique global equities manager based in Sydney. It is majority owned and managed by its investment staff, with the remaining interest owned by the NAB Group. Redpoint was founded in 2011.
Investment objective
Aims to deliver a return (after fees) that exceeds the FTSE Developed Core Infrastructure Index (hedged to Australian dollars, net dividends reinvested) over rolling 5 year periods.
Investment approach
Redpoint’s method of choosing and weighting infrastructure companies is different from the benchmark’s. Redpoint believes it can capture the asset class returns available more effectively from the wide range of investment opportunities around the world.
To meet the investment return objective, Redpoint:
considers investments from a wider universe of companies than the benchmark
holds companies that are not in the benchmark and excludes some companies that are, and
often holds companies at significantly different weights to the benchmark.
Redpoint selects and weights companies according to two components: strategic and dynamic. The strategic component reflects the wider universe and ensures the portfolio is not concentrated in a small number of larger capitalisation companies. The second stage is a dynamic component that involves an assessment of each company.
Redpoint references a wide range of quantitative and qualitative data and information to analyse a company’s:
dividend yield: higher dividend yields can help boost income from the portfolio’s investments
financial leverage: Redpoint limits exposure to excessive leverage, and
sustainability: Redpoint believes that managing the portfolio’s exposure to take into account certain labour standards and economic, environmental, social and corporate governance factors can enhance long-term returns.
Indicative asset allocation ranges
Australian infrastructure securities: 2%-6%
International infrastructure securities (hedged): 92%-98%
Cash and cash equivalents: 0%-2%

15. For Plum investors: MySuper’s new medium-term asset allocation
Sector
Old
New
Change
Australian shares
27% -
Global shares (unhedged)
22%
Global shares (hedged) 3%
Property 4%
Global private equity
Infrastructure * 2%
+2%
Growth alternatives 7%
Insurance-related investments (hedged)
Efficient beta
Risk management overlay
Total growth
67%
69%
Defensive alternatives
14%
Global absolute return bonds
Alternative beta strategy
Extended credit 8%
Fixed interest
15%
13%
-2%
Enhanced cash
Total defensive
33%
31%
Total
100%
* Actual allocation to infrastructure is 0.25% (as at 30 April 2017)

16. For MLC investors: MySuper’s new asset allocation
Asset class
Target allocation
Benchmark asset allocation
Old
New
Change
Australian shares
27% -
28%
Global shares (unhedged)
22%
17%
Global shares (hedged) 3% 8%
Global property securities (hedged) 2% 1%
Unlisted property 4%
Global private assets 5%
Alternatives and other (growth) 7% 9%
+2%
Insurance-related investments (hedged)
Efficient beta
Infrastructure * 0%
Currency and derivative strategies
Total growth assets
67%
69%
70%
Australian fixed income
10%
-1%
11%
Global fixed income
Enhanced cash
Alternatives and other (defensive)
14%
Global absolute return bonds
Alternative beta strategy
Non-investment grade bonds
Total defensive assets
33%
31%
-2%
30%
Total
100%
* Actual allocation to infrastructure is 0.25% (as at 30 April 2017)